December 1, 2010
A new report by the OECD makes sobering reading as it makes the point that continued expansion of spending in developed countries is unsustainable. Reading the reported highlights, a couple of statements jumped out at me.
“Healthcare costs are escalating rapidly, driven by population aging, rising relative prices and costly developments in medical technology. Public health care spending is projected to increase by 3.5 to 6 percentage points of GDP by 2050 in the OECD area,” the report said.
“Against this background, exploiting efficiency gains will be crucial to meet rapidly growing health care demand, without putting the public finances on an unsustainable path”
The stark figures are, indeed, challenging but the analysis of causes and benefits seem somewhat disconnected. The report talks about the rapid rate of increase in life expectancy which is, I think, a valuable output from the investment but does, of course, in combination with lowering birth rates, lead to a rapidly ageing population. It is this that is the real driver of cost and not, I would suggest, the “costly developments in medical technology”. In fact, the relative share of medical technology as a percentage of total healthcare expenditure has not grown for several years in spite of an explosion in beneficiaries of these transformational technologies. Think of the millions of recipients of cardiac support devices and stents that now lead active lives rather than dying or languishing in moribund states. Similarly, those afflicted with cataracts and chronic arthritis are able to lead active and fulfilling lives as a result of intraocular lenses and othropaedic implants. The cost benefit of active balanced older citizens versus impaired, disabled and often depressed individuals has scarcely been looked at.
More easy to understand is the impact of modern technology on the efficiency of healthcare systems. During the last 20 years average hospital stay times have reduced by 50%. This is no achievement of organisational behaviourists. It has been underpinned by more effective and efficient diagnosis, treatment and management of patients in all parts of the continuum of care. Morbidity and mortality have improved along with costs. This is what technology does! It allows you to produce more for less and improve quality at the same time. Imagine the cost of not having managed this transformation and having to support double the number of hospital beds. That would be a very costly situation and suggests that, before technology is charged with being the problem, we actually evaluate the contribution already delivered.
What is very clear is that there is a need for more efficiency and effectiveness if health systems are to continue to deliver improved productivity in the face of a decline in the availability of caring staff. “Hoorah!” therefore for the EU Commission who have just launched their European Innovation Partnership (EIP) on active and healthy ageing. The core tenet of this exercise is that innovation will be key to delivering cost effective, high-quality healthcare in the future. To do this, the players need to come together in a spirit of collaboration and drive projects on the basis of sound economic analysis in order to ensure that investments are made where the effect will be highest rather than keeping arcane practices in place and submerging beneath a sea of people costs.
Eucomed Chief Executive