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Science-Driven Innovation and Tech-Driven Innovation: A Marriage of Convenience or a Marriage Made in Heaven?

NEHI recently convened a meeting on health care innovation policy at which the Harvard economist David Cutler noted that debate over innovation has shifted greatly in the last decade. Not that long-running debates about the FDA, regulatory approvals, and drug and medical device development have gone away: far from it.

But these concerns are now matched or overshadowed by demands for proven value, proven outcomes and, increasingly, the Triple Aim, health care’s analog to the “faster, better, cheaper” goal associated with Moore’s Law.

To paraphrase Cutler, the market is demanding that cost come out of the system, that patient outcomes be held harmless if not improved, and it is demanding innovation that will do all this at once.   Innovation in U.S. health care is no longer just about meeting unmet medical need. It is about improving productivity and efficiency as well.

In this new environment it‘s the science-driven innovators (the pharma, biotech, and medtech people) who seem like the old school players, despite their immersion in truly revolutionary fields such as genomic medicine. It’s the tech-driven innovators (the healthcare IT, predictive analytics, process redesign, practice transformation and mobile health people) who are the cool kids grabbing the attention and a good deal of the new money.

To make matters worse for pharma, biotech and medtech, long-held assumptions about our national commitment to science-driven innovation seem to be dissolving. There’s little hope for reversing significant cuts to the National Institutes of Health. User fee revenues painstakingly negotiated with the FDA just last year have only barely escaped sequestration this year. Bold initiatives like the Human Genome Project seem a distant memory; indeed, President Obama’s recently announced brain mapping project seems to barely register with the public and Congress.

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How Do We Bend the Cost Curve? Reduce the Waste.

Health care had its own version of the LeBron James “Decision” last month with the Supreme Court upholding the critically important elements of the Affordable Care Act. Now that the uncertainty is behind us―at least until the November elections―health care leaders can continue preparing their organizations for the changes ahead.

Fixing the system requires reforms at the macro level. But it also takes a symphony of smaller actions happening in concert. As experience bears out, it is difficult to agree upon a collective action with so many competing interests in health care and the partisanship that has gripped politics. But there is a song that we can all agree upon, loud and in unison. Reduce the waste.

Nearly a third of our health care costs come from wasteful spending and inefficiencies that could be avoided. Left unchecked, this is a nail in the coffin of our system; but, if tackled, is a huge cost containing opportunity. By identifying waste in the delivery system and systematically reducing it, we could lower costs without resorting to budget cuts and fees that compromise the quality of care.

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Innovation is Key to Controlling Health Care Costs

In the battle over health care that lies ahead, how strongly will the public rally around the need for innovation in confronting health care costs?  Does the public view innovation as relevant to the challenge in the first place?

These aren’t idle questions. The news that growth in overall national health care spending has been moderating has raised speculation that innovations in payment and health care delivery are already paying off, notwithstanding the unquestioned impact of the Great Recession.

Looking ahead, uncertainty over the fate of the Affordable Care Act and the likelihood of federal budget cuts yet to come has many fearing that innovations will be vulnerable. And it is not just federal spending that will be at risk. Hospitals and health plans will all be watching their margins carefully to assess how far and how fast they can keep making investments that support innovation (such as investments in healthcare IT, analytics and care coordination) but that may take months or years to generate a return.

All of which places the role of innovation in controlling costs center stage. After all, this is what undergirds the Triple Aim that so many health care leaders have embraced as the only realistic alternative to arbitrary cutbacks in health care services and spending. Health care leaders can defend innovation if they have public support. But do they?

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