On health care

Bruce Bassi
December 11, 2003

An Inspection of Healthcare

“Healthcare Technology, Economics and Policy: An Evolving Balance”

There is a direct correlation between technology and the cost of medical services. Generally, if the technology is cheap and efficient, then medical fees will be low. Yet high fees imply but not always guarantee increased quality of healthcare and treatment. The expansion of such healthcare is in the hands of the service providers, of whom see direct benefits to growth. This is why an extraordinary portion of the United States GNP is spent on healthcare. While most of the United States continues to focus on healthcare, a gap is widened between the industrialized countries and the third world countries.

The United States has made strides in improving the quality of life of its general population. The average age of death has increased steadily because of better services to seniors, cases of illnesses have been less frequent, surgical procedures have been mastered to near perfection, and new methods have been developed are either noninvasive, such as drugs or pills. Such improvements on the quality of or lifestyle puts healthcare providers in the mindset that the more we spend on medical services, the better the services will always become. However, from another perspective, healthcare spending has become out of control, and measures have been taken to impede spending. One way of accomplishing this goal is to make more effective technology, such as home treatments, or innovative new ways to provide the same care at less cost. Engineers must be sensitive to whom their technology costs.

To put into context, a direct cost to a patient may be medical bill from medication or a procedure, while the cost to provider may be the supplies and equipment. Affecting the public domain is the percent of the GNP spent on healthcare. Indeed, everyone affected may be frightened at one point at the dramatically increasing healthcare costs. Various foundations have developed policies to stimulate production of cost sensitive healthcare technologies. Funded by National Science Foundation and the Whitaker Foundation, such initiatives include development of a broad metabolic condition detector, which could diagnose a handful of diseases from a single noninvasive measurement. Another initiative focuses on vaccine production and delivery. Currently expensive and inhibiting, the group hopes to provide easily attainable and inexpensive alternatives. A common theme of these household procedures is that the patient is taking on a role of the treatment administrator, thus excluding costs of room fees and doctor’s labor fees.

This new role is a point of expansion. Engineers and healthcare practitioners see this as a way to dramatically reduce costs to the patient, the provider and the public alike. These new innovations look promising considering at home diabetes kits have been a public favorite. The challenge is that their impact is generally slow and comes from a better treatment over a long period of time. While in the short term, the spike in healthcare costs may give a false sense of failure of the technology’s purpose to reduce costs.

Other target areas showing great potential to reduce costs are the technologies to treat cardiovascular disease. The problem is that they must be more efficient and advanced than the technology they are replacing. Sometimes the raw cost of the replacement equipment is cheaper than the “outdated” equipment, and in turn costs more to the healthcare provider because if its increased popularity, of a cheap procedure. This exact kick back effect was seen in the technology improvement of the laparoscopic removal of gall bladders. At the introduction to the new technology, the costs to the patient and the healthcare provider were reduced, because a longer surgery was offset by a quickened recovery period. As a result, the procedure became in higher demand, which contributed to a greater cost to the healthcare providers. All of these implications are not normally planned in the invention of the new technology.

Biomedical engineers are now beginning to take into account the dynamics of the healthcare system, and its changes as a direct result of the improved technology. Universities are beginning to intertwine engineering classes with healthcare classes in the graduate courses. This will teach them to be familiar with the economy, better entrepreneurs, insurance handlers and political legislators. The students will work hand in hand with the healthcare purchasers and administrators to formulate, assess and improve the benefits of low cost technology.

In order to assure improvement in the healthcare field, it is essential that the engineers know the relationship between the quality of healthcare and the cost of technology. The relation is complex and depends on economic and political issues, but nevertheless, it remains essential that we keep the costs under control, without compromising the quality of the healthcare system.

“Can Technology Truly Reduce Healthcare Costs?”
The biggest constraint on healthcare is its affordability. Had it not been for reasonable medical costs, medical innovations would boom. The new technologies may temporarily spike costs, which in turn call to healthcare purchasers, providers, patients and in some cases, politicians, for new cost-containment policies. Healthcare is typically viewed by the aforementioned demographic as just care to the unhealthy, as its name implies. But healthcare has more to it; it provides jobs, income, economic stimulus and contributes to medical research. It is necessary for all societies to take into account the benefits, along with what people usually focus on: healthcares potholes. “Medicine used to be simple, cheap, often inexpensive, but relatively safe; now it is complex, expensive, usually effective, and potentially dangerous” (p 20). The dangers in healthcare result in inefficiency and waste. The combination of health risks, ineffectiveness, and the financial commitments catches the attention of politicians.

Most people who are uninformed of the engineering of technologies, but knowledgeable with the business of healthcare see its expenses as unnecessary sway from a reasonable baseline cost. Over the last half century, the value healthcare, monetarily and sentimentally, and its expectations have increased several fold, and so has its costs. Some areas in which costs can be cut are making of less expensive technology, increase productivity, use of in-home healthcare, and identify inefficient or short living medical devices.

Evaluating and improving the healthcare system involves prioritization since the budget is limited. There are four fundamental methods of analysis: cost-minimization, cost-effectiveness, cost-utility and cost benefit analysis. Cost-minimization analysis is an adequate comparison when two technologies are in the same field of study and perform the same objective. Cost-effectiveness analysis is used when the two technologies perform different duties, but can be measured in the same units, such as number of cases detected. Cost-utility analysis attempts to compare technologies that also accomplish completely different objectives, yet their benefits can be measured yet have a common benefit. One typical index is the “quality adjusted life year” (QALY) which measures how many more healthy years the piece of technology puts on the life of the patient. Lastly, the cost-benefit analysis directly compares the money saved by using a particular piece of technology—a very rough measure, but useful when payment is necessary for use of the equipment. It is clear that the benefits can be divided into many categories, as can the expenses.

The costs of healthcare can be divided into three categories. First are the costs of the healthcare provider, such as labor wages, supplies, and facilities rent. The costs taken by the patient include travel and lost income. Then there are external costs such as advertising and legal representation. All of these categories are just manmade ways to make something subjective fall into quantitative categories, and one must know that problems occur when this happens.

The most common, cost-utility analysis, measures the effectiveness and importance of technologies by the years of life gained. This is a difficult variable to measure. The measure is not distinct, but actually a collaboration of opinions from medical practitioners. The according to the categorization, the “quality of life” labels a stress free and disease free life as 1.000 on the Rosser Index; a moderately stressful shortcomings as 0.942 and a mildly distressed life as 0.845. The Rosser Index is not problem-free either, it discriminates against the elderly, and those with rare diseases and also give misconceptions to those rare patients who can be very successful with a certain procedure. The categorizations are not only difficult to quantify but also are not very helpful with changing procedures.

When a new technology is introduced, healthcare officials and doctors want to know if the procedure is actually more cost efficient. The best way to go about knowing this is through what is known as a “randomized controlled trial.” This method provides direct unbiased correlations between two actions, such as smoking and lung cancer. Usually no other evidence is considered since this approach is so well established. Our intuition would lead us to think that we should also carry out an economic analysis along with the randomized controlled trials. However such counter thought is that there is no need to waste money on another study if the trials are already poorly designed. To put into context, an economic analysis of the costs and benefits of a medical procedure might be improved health and increased work productivity, respectively. When the randomized controlled trials are applied to a technology that is still in development, a dilemma arises.

By the time the results and analysis of a trial is known, the technology is usually fully developed. The technology must become stabilized in the medical field in order to perform such a trial, and by this time, the health care practitioners may think it is immoral to deny it to just a random sampling of patients. Biomedical companies shy away from development of technologies that serve no practical way to reduce costs. The solution to the problem is to monitor the progress of the technologies implementation, and not wait for complete stability of the technology in the health field. A poorly invented piece of equipment or procedure can be identified quickly and can provide an unbiased comparison between competitors’ versions. Some logistics of the assessment include advice from clinicians, safety and effectiveness. This leaves out one important factor: cost. And as we have seen, cost is an important issue in healthcare technology.

Healthcare technology assessments have become a very important aspect of healthcare itself. It is estimated that for every $1 invested in an evaluation, $200 is made up in savings of that technology. The assessments make it known which procedures are ineffective, inefficient and expensive. Taking this into account, opponents of the assessments do not seem to be understanding of the benefits of such investments. All in all, one might wonder why the US spends so little on healthcare technology evaluations.

Healthcare policy is usually determined by the cost to the provider. Sometimes the consultations are less costly for the patients. Compare for example a telephone consultation versus a hospital visit. Both methods require the same time by medical specialists, but the financial benefits will favor the patient instead of the healthcare provider. The availability of the technology in a way can affect the healthcare costs in a less than hopeful situation. Healthcare that is administered to soon to die patients, or patients who are in vegetative states who are not allowed to die because of the authority of related family members. It is unfortunate that healthcare costs are inflated by technology that sometimes serves “no useful purpose” (p 23). This is a particularly distressing factor that can affect healthcare costs. Additionally we must consider in the cost of healthcare technologies the providers who do not offer risky, dangerous procedures due to possible law suits. Intuitively, by reducing the chance for error, costs are lowered. Although human error occurs frequently, there also exist risky procedures and systems of care. If the practitioners implement the suitable technology, errors of the healthcare managers’ responsibility can be reduced. Even in a world of perfect technology however, human error is always unavoidable, and this remains yet another challenge for innovators, and engineers.

With such a large population, economists, engineers and healthcare providers looking to maximize a dollar spent to yield the largest return may possibly neglect procedures that may save only a few lives. This methodology of advocating only procedures that can be performed to many people is simply inhumane. While we are evaluating our technologies, we may also need to consider looking at our own evaluation. It has been found that future improvements in technology would be either computer related, molecular, self-care, less invasive procedures, device and drug combination products, or organ substitutes. Yet with these improvements or innovations comes a changing environment with more or less management, different procedures or unknown risks. In addition to these artificially induced problems, new diseases or antibiotic resistances may also emerge, and infectious viruses may spread to new areas. All of which are impossible to predict, so it makes the assessment of healthcare technologies an ever changing challenge. Predicting the benefits of a technological substitution is also very difficult. First, the replacement is very rarely all encompassing, and secondly it is hard to always make a product that is less costly but produces same or better clinical results. Even if it was made, it would be difficult to identify clear cut benefits, because they do not always appear immediately. For example, a pacemaker may avoid the cost of medication for life, but the patient may never live to see the financial benefits. Also, while there may exist procedural benefits, there may also be reparations if there was a misdiagnosis; what good is an efficient, cheap procedure if it is unnecessary? The assessment of healthcare technologies is certainly not lacking in challenges.

“The Healthcare Technologies for Lifelong Disease Management”
The need for a perfectly rounded, well informed biomedical engineer has never been greater. Engineers must be sensitive to the costs of their new technology, its entailing costs, all while following normal engineering protocol. They must produce cutting-edge technology, meeting the needs of patients and doctors, and also be cost effective. Those involved in the development of new technologies play an important role in curbing rising healthcare costs. Most of these problems are not included in regular undergraduate curricula. Difficulties such as meeting FDA standards and sterilization procedures are commonly found “on the job” but excluded from engineering classes. More importantly, as engineers get promoted to higher managerial positions, they often find the positions challenging due to a lack of that background in college.

Many undergraduate programs do not prepare engineers for management positions. All engineers should understand the economics of healthcare implementation. Marquette University is leading the way in standardizing having a healthcare management program offered alongside a biomedical engineering track. The programs goals are to give students a background in business, economics while updating their technical and managerial skills. Ideally, graduates will be able to manage, utilize and assess healthcare technologies. It stresses economics, finance and regulatory procedures.

The curriculum consists of “six Healthcare Technologies Management courses… Business Administration courses…. and Technical/Professional Development electives” (p 50). A basic assessment of healthcare technology procedure is introduced. Courses review state, federal and international laws covering manufacturing and distribution of technology, “topics include medical device law, device standards, hospital accreditation, quality systems, regulatory paths to market, clinical studies, patient safety, risk management, and third party reimbursement” (p 50). It seems that these courses give students a broad overview of how their engineering creations would affect the world, once they are introduced. It is their hope that having these possible consequences in mind may change their design of the product. Although the program is all encompassing, it still takes less time to complete than a MBA program, and is also flexible to meet the needs of a specialized path of study.

The Marquette University Healthcare Technologies Management program hopes to educate engineers beyond normal engineering classes. It informs them of how their products will be implemented, and changed, and what consequences it will have on the market. Additionally, it prepares biomedical engineers to handle working in a management, or consulting position. A graduate with all of these traits may be an invaluable asset to a company, considering the endless reductions of costs that he or she may be able to brainstorm.

“Worlds apart? Healthcare Technologies for Lifelong Disease Management”
This article balances the focus of most of the others in the issue by offering a more personal, moral look on healthcare technologies. The previous articles have been concerned with cutting costs of healthcare for those who have access to healthcare. Not everybody does. There exists a frightening gap between the industrialized world and the third world countries that not many of us are aware of. “There is a definite asymmetry in the world as shown by the existence of more poverty than wealth, more hunger than sufficient nutrition, more injustice than justice, more disease than health…” (p53). According to Carlos Parsloe, the wealthy are far wealthier than the poor, and this has a correspondence to the respective healthcare systems. Michael Derouzos offers us some hope; “The gap can be bridged, but left to its own devices, the information marketplace won’t close it. We will need concerted effort, charity and more” (p 53). If we keep going about our regular business, the gap would continue to grow. We must make changes to fix the problem.

The best solution is education. We must educate the illiterate, the poor. In some cases, money is available to purchase fine healthcare equipment, but the maintenance of the technology is just as important as the purchase. The technology may last, and provide a temporary fix, but it will not provide a permanent solution. We must prepare and train, as well as sell the people of the third world countries. Fixing the problem requires more than the shipment of a high tech gadget.

High tech does not always imply excellent care. “Compassion, empathy, touch and knowledge from the physician and healthcare providers go a longer way than impersonal noncommunicating technology” (p55). Modern western medicine with fancy equipment, elaborate procedures and expensive medication is not always the best solution when all is required is the caring touch of another human. Sometimes this can be more valuable than the highest price tag of the most modern technology.

The solution to bridging the healthcare gap is two fold. First we must educate both worlds of the problem. This is not a conversational issue, and does not come up everyday. Secondly, we must go about changing the third world healthcare systems appropriately. A sale of an expensive piece of technology will not work. We must provide instructions and also humanity. Only with the combination of both these will we make progress. “Progress is more plausibly judged by the reduction of deprivation than by the further enrichment of the opulent” (p 55). Perhaps the majority of our assessment on healthcare should not have focused on the improvement of those with healthcare, but on who are lacking it.