Tuesday, April 14, 2015

James C. Robinson's "Purchasing Medical Innovation"

James C. Robinson is Leonard D. Schaeffer Professor of Health Economics and Director of the Berkeley Center for Health Technology at the University of California, Berkeley. His articles appear in a broad range of scholarly, medical, and journalistic publications, including Health Affairs, JAMA, and the Wall Street Journal.

He applied the “Page 99 Test” to his new book, Purchasing Medical Innovation: The Right Technology, for the Right Patient, at the Right Price, and reported the following:
From page 99:
But after years of acquiring each new technology, regardless of cost, hospitals no longer contract with every vendor, turn a blind eye to questionable marketing practices, and pay any price demanded. Hospitals are evolving from passive payers into active purchasers of medical technology.
Purchasing Medical Innovation addresses the dual imperatives of controlling costs and promoting innovation in the health care system. The book highlights the increase in health care expenditures caused by the introduction and utilization of new medical technology, including drugs and devices. At the same time, it underscores the importance of not undermining innovation through blunt increases in regulation, cuts in payment, or reductions in coverage for patients. The book argues that all four major players on the technology assessment and purchasing side of the U.S. health care system—the FDA, insurers, providers, and consumers—must alter the way they evaluate and adopt innovation.

Page 99 of the book focuses on the third of these four players: the changing role of hospitals as purchasers of medical innovation. Hospitals have historically competed with one another to attract physicians and patients by adding new technologies. While competition in other industries is typically a force for efficiency increases and cost containment, it has led to cost increases in health care. Locked in a “medical arms race,” many hospitals adopted new technology without regard to its cost-effectiveness.

The nature of hospital purchasing is changing, however. Financial incentives such as shared savings in Medicare and capitated payments from private insurers are encouraging hospitals to deliver high-quality care while containing their supply costs. Hospitals are moving away from passive adoption of new technology and playing an active role in evaluating and purchasing innovation.

Hospitals are important as purchasers and users of technology, but they are only one player. Systemic change is needed to curb costs and promote innovation in the long term. Regulators must ensure safety and efficacy while not creating insuperable barriers to market access. Insurers must weigh evidence from comparative clinical and cost-effectiveness research to make coverage decisions that improve the value of the services prescribed by physicians and adopted by patients. Physicians must not simply respond to the fee-for-service payment incentive to do more to make more. And consumers must become more engaged in medical decision-making.
Learn more about Purchasing Medical Innovation at the the University of California Press website.

--Marshal Zeringue