Lawrence observed that the vast array of medical innovations since World War II has led to a tremendous growth in the complexity of health care. The health care sector has not evolved to accommodate this complexity. In other sectors where complexity had significantly increased, sophisticated production systems have been implemented, an information technology infrastructure installed, and teamwork developed.

In medicine, these types of developments have not occurred in the health care delivery side. Production design is a foreign word. It is estimated that between 1 and 2 percent of total revenues in health care are invested in information technology—well below the level of investment in other information-rich industries. Physicians are still imbued in training with the principle of individual, professional autonomy despite the fact that most practitioners are not working in autonomous situations.

Funding information technology investments is a big problem. As McClellan commented it may be that the financial rewards for good information systems in the health care delivery industry are significantly lower than they are in other industries. Privacy concerns are also a barrier to investment in health care information systems.

Lawrence thought that there may be a role for the federal government in the development of the health care information infrastructure. He believed that Singapore might be showing the way through the creation of an investment pool for information technology experiments. He had in mind a federally sponsored investment bank that would be experiment- and innovation-driven. This bank would fund a number of major experiments and from these we would learn about how best to establish a health care information infrastructure.


Paul Citron said that the paradigms for implanted medical device innovation and drug innovation are quite different. Devices provide site-specific therapy and exhibit a direct mechanism while drugs act systematically and have an indirect mechanism of action. As a consequence, device therapy has fewer side effects than drugs. Further, devices incur a high initial cost at implantation that is amortized over the service life of the therapy, whereas the costs of drug therapy accumulate and can be substantial over the treatment period. Another key distinction is that devices undergo continuous evolutionary improvements usually with cost-effectiveness improvements while cost-effectiveness for drugs remains relatively constant.

Improvements in the cost effectiveness of devices can be intrinsic— technological improvements in the device—or they can be extrinsic—improvements in the way the technology is deployed. Examples of intrinsic

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