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Part VII Concluding Observations

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15 Summing Up: Reflections on Medical Innovation and Health Care Reform Harvey V. Fineberg Americans seem to have an ongoing love-hate relationship with medi- cal technology. We manage somehow to hold two contradictory views seeing technology as the culprit behind rising medical care costs and as the jewel in the crown of American medicine. This dual characterization- technology as both hero and villain-underlies this collection of papers exploring the direction of health care reform and its likely impact on the process of medical innovation. The authors in this volume appear to dis- agree more over the desired locus of managerial control in such reform than over its likely effect on medical innovation. Fundamentally, all are moti- vated by a laudable, though elusive, objective: to preserve investment in and progress toward needed medical advances while stifling technology that is harmful or that costs more than it is worth. As escalating medical costs threaten the security of growing numbers of middle-class Americans, reform in the financing of U.S. health care takes on heightened political expectations. Two critical elements of reform are broader, more secure insurance coverage for all Americans and reliable mechanisms for containing the growth in health care costs. The great de- bate, of course, is over the all-important details and unintended consequences: Who shall bear the costs, and how shall they be distributed? What mix of public and private financing mechanisms will work best and be most ac- ceptable? What means of cost control will be least onerous and still get the job done? What is the proper balance between market forces and regulation 249

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250 HARVEY V. FINEBERG as mechanisms for resource allocation? How can the quality of care be maintained and sensitivity to patient needs strengthened? And, the question directly prompting this volume, how will the process of medical innovation fare in the new age of health care reform? As explained in Chapter 1, medical technology covers a wide spectrum of drugs, devices, equipment, practices, and support structures. The model of medical innovation summarized by Laubach, Wennberg, and Gelijns sug- gests that the process of innovation occurs in diverse settings and ways. The practicing physician and surgeon shape the use of drugs, devices, and instruments as surely as the research chemist in a pharmaceutical firm or the engineer in an equipment manufacturing company. If we are to compre- hend the effects of health care reform on medical innovation, then we must comprehend not only the varieties of potential reform, but the impact of these reforms on a multiplicity of actors, including patients, practitioners, institutional providers, entrepreneurs, drug companies, and device and equipment manufacturers. The precise nature of financial and programmatic reform in the U.S. health care system is under active debate. The authors in this volume differ on the level at which "management" control should ideally be exercised in the new health care system. Some (such as Soper and Ferriss) hail the advantages of what has come to be known in the United States as managed care, believing that it offers the potential for higher quality of care, im- proved patient satisfaction, and better allocation of resources. Others (such as Wennberg) proclaim the virtues of system-level controls and lament the dangers especially those arising from ignorance of what truly works in medical care of attempting to regulate decisions at the level of individual practitioners. Wagner advances a model of management that stresses an intermediate, institutional level, seeing the health maintenance organization as a means of integrating a population perspective and operational capacity for control of resource use. From the vantage point of the patient, Mulley argues that a deeper danger in rigid clinical decision rules is their neglect of personal values that may make all the difference in choosing courses of diagnosis and treatment. This type of criticism may also be applied to the formulate approach being pursued in the Oregon ranking system described by Welch and Fisher. In the course of their discussion of the Canadian health care system, Barer and Evans point out that all health systems ration and manage care. To an economist, rationing occurs whenever a resource is finite, and the term does not connote the image of deprivation that it conveys in everyday use. In its current health care system, the United States does make choices, often by default, about resource allocation and management control. The debate about reform in U.S. health care makes a number of these choices more evident and explicit. What, for example, will be the degree of reli

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SUMMING UP 251 ance on market forces and competition among health care providers and payers? What will be the nature and mechanisms of management control at systemwide, institutional, and individual practitioner levels? How will the interests of individual patients and communities be incorporated in medical care decisions? In contemplating health care reform, it is easy and wrong-to confuse what creates a problem with what exposes the problem. The Oregon rank- ing system described by Welch and Fisher did not create rationing of medi- cal services among the state's Medicaid population. Efforts to make medi- cal decision making more systematic did not create ignorance about health outcomes and other consequences of medical interventions. Attempts to incorporate patient values and preferences into treatment decisions did not create insensitive clinicians. The issue in each case is to identify root causes of the problem and to devise ways to ameliorate them. From the other countries' experience with their health systems, we may derive three pertinent lessons. First, universal coverage may be attained in a single-payer system (such as Great Britain's) or in a multipayer system (such as Germany's). Second, universal coverage alone does not ensure cost control. Third, even the combination of universal coverage and cost control does not guarantee that resource allocation decisions will be made rationally or after careful evaluation. Williams, for example, points out in his paper that the United Kingdom has failed thus far to guide the diffusion of medical technology in a purposeful way. We in the United States have come to expect advances in medical tech- nology almost as a matter of course: miracle drugs, better laboratory tests, new ways of harnessing energy to visualize anatomic structures, creative use of space-age materials, innovative techniques in surgery, and electronic monitoring marvels. Such advances do not occur as a matter of routine, but result from a confluence of science, investment, talent, motivation, and opportunity. The richness of the crosscutting discussion in this volume about health system reforms and their implications should not obscure a fundamental, underlying truth: Any system of payment for health care exerts a profound influence on the pace and direction of medical innovation. Current incentives for investment in medical care are far from ideal. If we spend a great deal of money on insurance systems and documentation, we can expect entrepreneurs to invest effort and money in developing more creative and effective tools to extract payments based on whatever rules of reimbursement are in place. If hospitals compete by marketing their services to overlapping communities of patients, then, as Griner notes of the experi- ence in Rochester, we may expect those hospitals to acquire equipment or offer services that will provide a perceived competitive advantage (while meeting patient needs). Hillman draws similar conclusions in his descrip

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252 HARVEY V. FINEBERG lion of physician decisions to acquire and use new technology. Such invest- ments make perfectly good sense from the vantage point of a hospital or other provider, even if neither promises any real advantage to patients or communities. Whatever the complete mix of ingredients that determine medical inno- vation from cultural values to scientific advances to serendipity-there can be little doubt that innovation in the form of new medical products is subject to the same economic forces that apply in any commercial field of endeavor. Capital investment tends to flow over time to fields offering the greatest expected return on investment, and expectations of economic return will ultimately determine the amount of capital drawn to the health field. Although medical technology typically is shaped and reshaped by practitio- ners, capital investment in new ventures and established companies remains the principal engine behind new product innovation. The costs of medical care to a payer also represent income to a provider and return on investment to a supplier. On the face of it, the process of new product innovation seems imperiled by reforms that would diminish growth in payments for medical services. Two factors, however, diminish this hazard. First, even with lower rates of growth, the medical care sector is sufficiently large as to present significant opportunities for economic return on investment. Second, as discussed in the chapters by Telling and Holmes, pharmaceutical makers and equipment manufacturers are able and willing to respond to new economic incentives through such strategies as emphasizing development of more cost-effective alternatives and by reaching for truly breakthrough products. In this connection, Laubach, Wennberg, and Gelijns note the several innovations in less costly or ambulatory practice (such as lithotripsy) that have emerged from European companies and practitioners, where the rates of growth in medical costs have been temperate compared to those in the United States. Quite possibly, the new emphasis on cost- effective and breakthrough innovations (along with slowing of the rise in their own medical insurance costs) will position U.S. manufacturers to com- pete even more effectively in the global medical market. Thinking optimistically, what may emerge from health care reform is an enlightened strategy for medical innovation that responds to population health needs, to new system and organizational requirements, and to signif- icant advances in biological and technical knowledge. From the various recommendations posed throughout this volume, I would in closing high- light three: an ethic of evaluation, education of physicians and patients, and public policy to promote innovation. By an ethic of evaluation, I mean a widespread commitment and expec- tation among physicians, health care institutions, and the public that medi- cal practices must be evaluated for effectiveness, safety, and cost. At the heart of this new ethic is a recognition of how little is known about the

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SUMMING UP 253 consequences of many medical interventions, whether new or well estab- lished in practice. Adopting a systematic, pervasive strategy for evaluation will require public and private resources, but the return in terms of extended lives, reduced suffering, and cost savings can be substantial. Many leading medical educators are pursuing educational reforms that would better prepare physicians to understand the family and community context of their patients, the importance of disease prevention, the changing nature of the medical care system, scientific advances pertinent to clinical practice, and their roles as problem solvers in partnership with patients and as lifetime learners. Among the many challenges to medical education is to nurture an experimental outlook and desire for improvement of the sort that, for example, animated the stream of surgical advances described by Dr. Moody. If we expect physicians to be sensitive to the phenomenon of their patients' illnesses, as expressed so eloquently by Mr. Silberman, they must be taught how to do so. Physicians who can combine a heightened level of sensitivity to patients, technical skill, willingness to experiment, and com- mitment to evaluation will be valuable players in the new era of health care reform. Finally, innovation in medical care can be stimulated by expanded pub- lic investment in basic biomedical research, tax and other economic incen tives that favor investment in companies developing new technology, and fresh approaches in such regulatory bodies as the Food and Drug Adminis- tration to facilitate experimentation and earlier, controlled dissemination of technology (perhaps coupled with more stringent postmarketing evaluation requirements). Ideally, these policies would serve to accelerate the pace of innovation while steering the health care system toward cost-effective and genuinely advantageous technology. While the precise nature of reforms in health care remains to be seen, this volume launches a constructive dialogue on the probable consequences for the process of medical innovation. The discussion is likely to continue for some time and should be better informed because of this effort.

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