The Paradox of Technology in Healthcare

One of the great humdingers in the current debate over healthcare reform is the duplicitous role of technology in increasing costs. Sophisticated medical technologies save thousands of lives every year, giving us scans that spot tumors early and devices that keep our hearts beating and our blood flowing.

But these miracle technologies come with a paradox. In nearly every sector of the economy, technology drives costs down – just as your digital camera gets cheaper and better every year, so technology drives down the cost of manufacturing, the cost of retailing, the cost of research. But for some reason, in healthcare, technology has the opposite effect; it doesn’t cut costs, it raises them. In fact, medical technologies – from CT scans to stents to biologics – are a significant factor in the 10% annual growth rate of healthcare spending, a rate that’s nearly triple the pace of inflation. (Overall, the US is now estimated to spend a stunning $2.7 trillion on healthcare in 2010.)

This was made clear once again last week, when a Massachusetts state audit found that healthcare costs rose 20% from 2006 to 2008, largely because of new imaging technologies. The single largest increase was for digital mammography, a new – and expensive – way to screen for breast cancer.

What’s going on here? Why can’t technology work its magic in healthcare, the way it does in the rest of the economy?

The answer boils down to what’s called “scale” – the notion that technology, thanks to Moore’s law and other exponential improvements, gets progressively cheaper, better and thus more accessible. Cheaper and faster chips, sensors and storage mean that digital technology is constantly scaling up and out, touching the lives of more people. These improvements in cost and power are the democratizing force that has propelled GPS from a military technology to a cellphone feature, and they’re what helps Apple convince us to buy a new iPod every 18 months. Scalability is the secret sauce of the digital revolution.

Except in healthcare. In healthcare, technologies that scale are suspiciously hard to find. There’s no lack of technology, it’s just that they don’t seem to get cheaper and better at the same exponential rate as in the rest of the universe. This is especially strange because CT scans and pacemakers – to take two frequently blamed cost-generators – rely on the same digital technologies that are getting cheaper outside of healthcare.

There are a couple reasons for this. For one thing, there’s far too little price transparency in the medical technology market. Without an open marketplace of prices and services, it’s difficult for hospitals and clinics to know whether there’s a better deal elsewhere, and manufacturers can keep costs high. Secondly and perhaps more significantly, medical technologies still tend to rely on an expert class to actually deploy the technology. GPS may have turned us all into amateur navigators, but CT scans haven’t turned us into hobbyist radiologists. Those highly trained and expensive experts are still needed to actually put the technology to work, making it impossible to entirely automate a process. The result is that technology stays expensive to use, and costs keep going up.

At long last, though, that’s changing, and scalable technologies are coming to healthcare. But there’s a twist: instead of coming from your doctor or hospital, they’re going straight to consumers. Digital monitoring tools like the Nike+ system, which uses a little accelerometer sensor in your running shoe, let people make more informed choices and pursue better health behaviors. And new online decision tools like LifeMath.net, a project of Harvard University’s Laboratory for Quantitative Medicine, take advantage of cheap processing power to crunch data into personalized medical recommendations, making it far more relevant than generic advice (and thus much more likely to result in lasting change, addressing what doctors call “the compliance problem”). These and other tools use technology for what it’s good at. They put the tools directly in our hands, and get us engaged in our health before we need the expertise of specialists.

In the world of insurance and care providers, some folks already understand this, and are way ahead of Washington policy makers in tapping cheap technologies to improve healthcare. In Hawaii, Kaiser Permanente has started a pilot project that churn through its database of patient data to predict which patients might need which tests – and then sends individuals email alerts suggesting they come in for a test or checkup. It’s the same sort of technology that Netflix uses to recommend movies. And the Cleveland Clinic has teamed up with Microsoft to bring self-monitoring tools to patients managing chronic diseases, successfully engaging them in better health behaviors without expensive visits to the hospital.

In the last century, medical technologies ably did their part to extend the life expectancy of the average American to nearly 80 years. It’s time to reassess how we deploy technology in healthcare, and put the digital revolution to work not just for our entertainment, but for our health, too.

Thomas Goetz is the author of The Decision Tree: Taking Control of Your Health in the New Age of Personalized Medicine. The executive editor at Wired Magazine, you can follow him on Twitter twitter.com/tgoetz.

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