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Debate on the cost of innovation in healthcare: Is it too costly?
Abstract
This paper summarises a structured panel session regarding the cost of innovation in healthcare. The debate took place during the 2016 Simnovate Conference at McGill University. The audience, panel members and venue largely included members from academia as well as representatives from industry and organised medicine. The goal of the debate was to consider a balanced argument regarding the views of healthcare innovation and the associated costs.
VJD
### Demand and cost
The demand for healthcare is rising. The burden of disease is increasing. The population is ageing. We face the threat of emerging infectious diseases. We are struggling with health disparities.1 At the same time, all nations are facing the challenges in providing access, cost and quality healthcare.2 We are here today to talk about cost and to debate the various ways in which innovation may lead to an increase or a reduction of cost. Indeed, healthcare costs are extremely high and there is much concern about whether recent trends are sustainable. For instance, healthcare spending accounts for 19% of gross domestic product (GDP) in the USA and it is expected to grow another 4% this coming year. This is the basis for our debate.
### Drugs, medical devices and hospital care
A JAMA study in November 2013 noted that 91% of increased healthcare costs between 2000 and 2011 were because of the increase in the price of drugs, medical devices and hospital care.3 It is argued by industry that to develop novel breakthrough therapies, they must invest in innovation which is risky and costly. By charging for these new therapies, industry can recover the losses related to high-risk research and development. In essence, industry needs to be incentivised and reimbursed for the dollars they put in the innovation, which often includes patents and other costs to protect the innovation.
Consider exciting developments on the horizon, such …
... But innovation does reduce costs. An excellent example is Moore's law where a significant set of technologies are not just improving, but exponentially improving and reducing costs (examples are the use of mobile devices in the diagnosis and management of a host of disease conditions)[135]. ...
As people live longer, a larger percentage will live with multiple chronic conditions and functional impairments such as difficulties with activities of daily living, mobility, and the management of one’s household. The purpose of this paper is to examine the care of older persons in a technologically advanced nursing future by discussing roles and responsibilities of nurses who practice gerontological nursing, and explaining how a technologically advanced future would change the delivery of home health care for older persons in the community. The theory of Technological Competency as Caring in Nursing grounds 3 processes of nursing as knowing persons as caring, wholeness is oneness, and caring as a multi-dimensional process. Harnessing technology for the health of older persons would enable them to live independently, socially engaged, and safely. A technologically advanced nursing future leads to concomitant sustainable disruptive and frugal innovations in healthcare. Nurses in practice must take advantage of these disruptions and consider frugal innovations as the futures of nursing education, practice, and research are here.
Understandings of innovation usually encompass multiple overlapping aspects, putting innovation terminology at risk of vagueness and overuse. However, innovation concepts are expected to remain powerful and useful in healthcare beyond the pandemic and into the future, so clarity will be helpful for effective leadership. To disentangle and disambiguate meanings within innovation, we offer a framework that captures and simplifies foundational substance within innovation concepts. Our method is an overview review of innovation literature from the 5 years preceding COVID-19. 51 sources were sampled and analysed for explicit definitions of healthcare innovation. Drawing on broad themes suggested from previous reviews, and gathering specific themes emergent from this literary dataset, we focused on categorising the nature of innovations (the what) and reasons given for them (the why). We identified 4 categories of what (ideas, artefacts, practice/process and structure) and 10 categories of why (economic value, practical value, experience, resource use, equity/accessibility, sustainability, behaviour change, specific-problem solving, self-justifying renewal and improved health). These categories reflect contrasting priorities and values, but do not substantially interfere or occlude each other. They can freely be additively combined to create composite definitions. This conceptual scheme affords insight and clarity for creating precise meanings, and making critical sense of imprecision, around innovation. Improved communication and clear shared understandings around innovative intentions, policies and practices cannot but improve the chances of enhanced outcomes. The all-inclusive character of this scheme leaves space for considering the limits of innovation, and notwithstanding well-established critiques, provides a basis for clarity in ongoing usage.
Innovation has become an increasingly common topic in healthcare. Private companies, developers, payers, and regulators are devoting attention toward innovative products and processes as a crucial component of their interests in and occupation with healthcare services. Even when there is no consensus as to its definition, “innovation” —as opposed to “invention”— is broadly understood to refer turning a good idea into a practical solution. Adoption and applicability are key components of implementation that are sustained not only on innovation’s attributes themselves but also in the characteristics of providers, users, and implementing organizations, as well as the external environment. Regulatory agencies often face the need to make decisions about proposed innovations with obsolete or inadequate normative frameworks and with a high degree of uncertainty about its eventual performance or its risks. Early interaction between developers and dedicated multidisciplinary teams at regulatory agencies may prove instrumental for speeding up the time required for proper evaluation and product registration, as well as the establishment of quality validation mechanisms. Community involvement both in the adoption and vigilance on innovative products and processes is crucial for completing the process of defining their roles and uses.
New disciplined techniques are being deployed for testing potentially value-producing ideas faster, less expensively, and more reliably. Vapor tests, fake front ends, fake back ends, and mini-pilots can all help health care organizations meet patients' needs.
Personalised medicine has generated global policy interest in the past few years. In 2012, the European Union established the European Alliance for Personalised Medicine with the aim to accelerate the development, delivery, and uptake of personalised health care, broadly defined. In the same year, the UK's Medical Research Council and National Institute for Health Research funded the National Phenome Centre to deliver broad access to a world-class capability in metabolic phenotyping for biomarker discovery and validation, improved patient stratification, and early identification of drug efficacy and safety.
Challenged by demands to reduce costs and improve service delivery, the U.S. health care system requires transformational change. Health systems innovation is defined broadly as novel ideas, products, services, and processes-including new ways to promote healthy behaviors and better integrate health services with public health and other social services-which achieve better health outcomes and/or patient experience at equal or lower cost. Academic health centers (AHCs) have an opportunity to focus their considerable influence and expertise on health systems innovation to create new approaches to service delivery and to nurture leaders of transformation. AHCs have traditionally used their promotions criteria to signal their values; creating a health systems innovator promotion track could be a critical step towards creating opportunities for innovators in academic medicine. In this Perspective, the authors review publicly available promotions materials at top-ranked medical schools and find that while criteria for advancement increasingly recognize systems innovation, there is a lack of specificity on metrics beyond the traditional yardstick of peer-reviewed publications. In addition to new promotions pathways and alternative evidence for the impact of scholarship, other approaches to fostering health systems innovation at AHCs include more robust funding for career development in health systems innovation, new curricula to enable trainees to develop skills in health systems innovation, and new ways for innovators to disseminate their work. AHCs that foster health systems innovation could meet a critical need to contribute both to the sustainability of our health care system and to AHCs' continued leadership role within it.
On July 29, 2014, the Institute of Medicine (IOM) released its report on the governance and financing of graduate medical education (GME).(1) An important incidental finding of the IOM's study was that the evidence base available to inform future directions for the substance, organization, and financing of GME is quite limited. The limited evidence reflects a systematic lack of research investment in an area of health care that we believe deserves better. Our nation's lack of research in medical education contrasts starkly with the large and essential commitment to biomedical research funded by industry, philanthropic organizations, and the public. No . . .
Rather than seek solutions to health care's problems in facile recommendations from management gurus with experience in unrelated industries, we'd do better to find a solution process to use from within. And the process for high-impact innovation can in fact be learned. Many health care professionals find it irritating when management gurus recommend solving health care's problems with approaches they would copy and paste from unrelated industries a former chief executive of a manufacturing company claims that the same simple lessons that enabled him to transform his own industry can improve value in health care, or a business-school professor offers an eight-point leadership plan that she's translated into health care as easily as if she'd translated it into French. Many people who work in health care value outside perspectives and are open to new approaches and yet bristle at facile ...
Health care in the United States includes a vast array of complex interrelationships among those who receive, provide, and finance care. In this article, publicly available data were used to identify trends in health care, principally from 1980 to 2011, in the source and use of funds ("economic anatomy"), the people receiving and organizations providing care, and the resulting value created and health outcomes. In 2011, US health care employed 15.7% of the workforce, with expenditures of $2.7 trillion, doubling since 1980 as a percentage of US gross domestic product (GDP) to 17.9%. Yearly growth has decreased since 1970, especially since 2002, but, at 3% per year, exceeds any other industry and GDP overall. Government funding increased from 31.1% in 1980 to 42.3% in 2011. Despite the increases in resources devoted to health care, multiple health metrics, including life expectancy at birth and survival with many diseases, shows the United States trailing peer nations. The findings from this analysis contradict several common assumptions. Since 2000, (1) price (especially of hospital charges [+4.2%/y], professional services [3.6%/y], drugs and devices [+4.0%/y], and administrative costs [+5.6%/y]), not demand for services or aging of the population, produced 91% of cost increases; (2) personal out-of-pocket spending on insurance premiums and co-payments have declined from 23% to 11%; and (3) chronic illnesses account for 84% of costs overall among the entire population, not only of the elderly. Three factors have produced the most change: (1) consolidation, with fewer general hospitals and more single-specialty hospitals and physician groups, producing financial concentration in health systems, insurers, pharmacies, and benefit managers; (2) information technology, in which investment has occurred but value is elusive; and (3) the patient as consumer, whereby influence is sought outside traditional channels, using social media, informal networks, new public sources of information, and self-management software. These forces create tension among patient aims for choice, personal care, and attention; physician aims for professionalism and autonomy; and public and private payer aims for aggregate economic value across large populations. Measurements of cost and outcome (applied to groups) are supplanting individuals' preferences. Clinicians increasingly are expected to substitute social and economic goals for the needs of a single patient. These contradictory forces are difficult to reconcile, creating risk of growing instability and political tensions. A national conversation, guided by the best data and information, aimed at explicit understanding of choices, tradeoffs, and expectations, using broader definitions of health and value, is needed.
Globalization is having a growing impact on health and health care, presenting challenges as well as opportunities for the U.S. health care industry in general and for academic health science systems (AHSSs) in particular. The authors believe that AHSSs must develop long-term strategies that address their future role in global medicine. AHSSs should meet global challenges through planning, engagement, and innovation that combine traditional academic activities with entrepreneurial approaches to health care delivery, research, and education, including international public-private partnerships. The opportunities for U.S.-based AHSSs to be global health care leaders and establish partnerships that improve health locally and globally more than offset the potential financial, organizational, politico-legal, and reputational risks that exist in the global health care arena. By examining recent international activities of leading AHSSs, the authors review the risks and the critical factors for success and discuss external policy shifts in workforce development and accreditation that would further support the growth of global medicine.
Evidence is accumulating that the United States is falling behind in its potential to translate biomedical advances into practical applications for the population. Societal forces, increased awareness of health disparities, and the direction of clinical and translational research are producing a compelling case for AHCs to bridge the gaps between scientific knowledge and medical advancement and between medical advancement and health. The Duke University Health System, the city and county of Durham, North Carolina, and multiple local nonprofit and civic organizations are actively engaged in addressing this need. More than a decade ago, Duke and its community partners began collaborating on projects to meet specific, locally defined community health needs. In 2005, Duke and Durham jointly developed a set of Principles of Community Engagement reflecting the key elements of the partnership and crafted an educational infrastructure to train health professionals in the principles and practice of community engagement. And, most recently, Duke has worked to establish the Duke Translational Medicine Institute, funded in part by a National Institutes of Health Clinical Translational Science Award, to improve health through innovative behavioral, social, and medical knowledge, matched with community engagement and the information sciences.
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