Uncategorized

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.

Livongo’s Post Ad Banner 728*90

Categories: Uncategorized

Tagged as: ,

21
Leave a Reply

21 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
17 Comment authors
shredding DallasronyBill SimmonsNatalie Hodge MD FAAPJTC Recent comment authors
newest oldest most voted
shredding Dallas
Guest

It is hard enough to get yourself a good medical insurance, and now it has become even harder to actually afford one. These days, it is becoming more and more difficult to avail of proper medical assistance and if you are not very careful, you can end up without any benefit or someone else might use your own information to their advantage and this is very unfortunate. In this case, you can shred copies of your records so that even if you dispose of them nobody can make use of the shredded strip anymore. the protection of our medical records… Read more »

rony
Guest

job with free paradox

Bill Simmons
Guest

You should consider attending the annual behavioral health informatics conference — really opened my eyes last year. http://www.openminds.com/ibhi

Natalie Hodge MD FAAP
Guest

Mr Goetz, there are multiple factors at work here. What you are forgetting is that upwards of 90% of the healthcare of America can be attended to with a careful history, physical exam of a primary care physician. We rarely need expensive tests, antibiotics, imaging studies or stents, when given the time to do our job well. Take a look at Frank Moss from MIT’s cost curve slide from Mayo Transform Symposium last fall. Disruption is where our cost savings are to be found, not in reform. Our interest was to create a virtual office platform for primary care doc’s… Read more »

rbar
Guest
rbar

You can decrease costs of machinery if there is price competition – full body scans are only for a gullible but affluent minority, and there are probably few people who’d say: I’d get that scan if it was a few hundred bucks cheaper.
Interesting reading incl some lines about imaging costs:
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/interviews/ikegami.html

JTC
Guest
JTC

I thought microeconomic theory states that technology will lower *production* costs. That is, technology that can more efficiently produce products will shift the curve downward because more products can be made per given amount of time. I believe that the above microeconomic theory is distinct from a discussion of the consumer’s desire to purchase more expensive technology. So I would hazard to guess that, in order for technology to decrease the costs of health technology, new technology would have to be implemented to make the production of health technology cheaper. For example, MIT recently announced news about self-building microprocessors. If… Read more »

John
Guest

Technology, insurance companies, physicians, hospitals – everyone wants to blame someone for the health care “crisis”. The fact is we, as Americans are fat and lazy. Don’t get mad at the messenger – I fall into that category too.
Wanna cut health care costs in half? All you have to do is get the majority of Americans to exercise and maintain a healthy body weight and you can.

The EHR Guy
Guest

Consumer devices do not have to go through a regulatory process with the FDA.
This process raises costs 100 fold or more.
Your comparitive analysis is not valuable by having health care medical devices compete with consumer gadgets.
And when you get into medical imaging you have no idea the complexity involved not only in developing the software and devices but in the installation, integration and interoperability of them with one another.
And what Ms. Margalit Gur-Arie indicates there are many devices that have been able to immensely scale down in costs and go directly to the consumer.
The EHR Guy

chris
Guest

As long as we continue to provide “sick care” and not “health care” it will never work. Prevention of disease is better than treating it. But no one makes money keeping people healthy!!!!

Anonymous
Guest
Anonymous

As a member of the payer community, I can add that the increased price of medical technology is not just a simple matter of substitution (high priced new technology for old technology.) What is most telling about the paradox of medical technology “progress” in health care is that the price for the SAME CT scan for the SAME PROVIDER goes up year after year, and not at the rate of inflation. No new machine, no new anything. It’s the exact same thing as last year but now we charge 10% more because we have one of the few imaging devices… Read more »

bev M.D.
Guest
bev M.D.

Uh, Tom; I thought the bill contains subsidies for those who cannot afford to buy insurance….I doubt that part was removed.

Tom
Guest
Tom

I have one question. How is the poor going to be able to afford this health care bill??? For instance every state in the union requires everyone to have car insurance, so the only way around it is not to drive and take the buss or walk. This health care bill will force everyone to get it weather you can afford it or not putting the poor at a further disadvantage to even help themselves get out of poverty. Even the IRS will come and take what ever the poor have left as a penalty fine to pay for it.… Read more »

rbar
Guest
rbar

Of course you could have price competition on elective, standardizable exams. Have someone set quality standards for MRIs and CTs which a patient could deliver to a radiologist of his choice, or have the scanning company provide the reading too. But it does not happen because there is usually a 3rd party payor and there is no price competition, as others already pointed out. And if one would puh standardization of hospital workflow and accreditation, you could choose your own therapists and consultants while you are in the hospital…

Propensity
Guest
Propensity

Nauseating with nickel and dime mentality as expressed “giving us scans that spot tumors early and devices that keep our hearts beating and our blood flowing.”
Sometimes. But most of the time, the hype overwhelms the reality.
Overall costs do not come down because of both manipulated supply and demand coupled with fee decrements decreed by the Federal Government.

MD as HELL
Guest
MD as HELL

It’s not a paradox of technology. It is a predictable result when the recipient is not the payor. Also when you have to keep up with the Jones’ and have your MRI, too, or you will sue your doctor if you have anything remorely bad ever happen to you.