How technology drives up health costs

How technology drives up health costs

Summary: Moore's Law doesn't stand a chance when the state-of-the-art at the top end is all that counts.

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Imagine if printers controlled the PC market.

A new printer, no matter its cost, or the cost to use it, would be the coolest thing to have. If necessary you would tear out your whole network, all your PCs and other peripherals, just to support the latest printer.

Even if you had to pay thousands of dollars to print one page, you would justify it as necessary.

That's health IT. That's how the industry has evolved over the last decade, from CT scanners and advanced MRI machines inward, rather than from PCs and networks outward.

Moore's Law doesn't stand a chance when the state-of-the-art at the top end is all that counts.

There are good reasons for hospitals to have the latest imaging equipment. Today's gear gives patients much smaller doses of radiation than in the past. Radiation cost is why scanning had been limited. As that cost goes down demand goes up.

When a new MRI machine costs $1 million you have to charge thousands of dollars to use it. But lower radiation costs, and better resolutions, both drive doctors to demand more scans, which they can then excuse as defensive medicine -- fear of lawsuits. (Thus  lawyers are looking at over-use of imaging as grounds for suit.)

Everyone winds up getting too many tests, and when doctors own the equipment the conflict of interest should be obvious. But it is largely unexplored.

Right now the pushback against this is political and scientific.

To be effective it has to become economic.

By that I mean we need incentives for doctors to benefit financially when they reduce their reliance on expensive tests, and a requirement that use of the pricey peripherals be justified before their use and audited afterward.

Data can help with that. Larger population studies, examining results from millions of patient profiles, can tell you the relative value of scans. These results get more granular as more data goes into the pile. If we have data on 1 million 55 year old men with hypertension, in other words, we have more validity than when we have data on 1 thousand.

Those results need to go into best practices that physicians are told to follow. Exceptions are possible, but they need to be noted, their results tracked, and doctors held to account when it's proven they are chasing too many wild geese.

The best price-performance in the hospital industry today comes from systems like Intermountain that also insure people and thus have an economic incentive to both limit scans and deliver results.

Aligning market incentives with efficiency, forcing doctors to justify use of the printer, is the thumb that needs to go on the health cost scale.

Topics: Hardware, Banking, Software, Printers, Legal, Health, Enterprise Software, Data Management, CXO, IT Employment

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  • I'll disagree on a few points

    "By that I mean we need incentives for doctors to benefit financially
    when they reduce their reliance on expensive tests, and a requirement
    that use of the pricey peripherals be justified before their use and
    audited afterward."

    The last time we designed a system to financially reward doctors from
    ordering expensive tests we called it HMOs. I don't believe in having an
    environment when doctors are financially rewarded by denying tests or
    treatments.

    Those results need to go into best practices that physicians are told to
    follow. Exceptions are possible, but they need to be noted, their results
    tracked, and doctors held to account when it?s proven they are chasing
    too many wild geese.

    We have standard protocols today and the doctors I have been to follow
    them. Their acceptance is because they know the protocols work. I
    would, however, never want to go to a doctor who is afraid to treat me
    because some commission will investigate him or her for doing
    something not carved in stone.

    For me it gets down to the need to maintain the art of medicine as we
    continue to develop the science of medicine. And let's not confuse the
    science of medicine with the financing of medicine.

    And let's not forget that the more you reduce the use of equipment like
    MRIs that are now in place the more expensive it gets because fixed
    costs are spread over fewer patients.
    Ken_z