venture whose very survival depends on research success, than would be the case for that same project embedded in a multibillion dollar corporation! One might also surmise that R&D projects with long time horizons, or much technical uncertainty, or foreseeable complexities in clinical or regulatory assessment, would be judged less feasible by a small, thinly financed firm than by a firm with ample resources. Industrial R&D management—its strategies, emphasis, direction—is influenced by the circumstances in which the firm finds itself—or perhaps more aptly, perceives itself—and all the forces at play may not be apparent to the author of a case study.

But the dramatic, recent changes in the structure of American health care represent one highly visible, and very potent, force that is impacting R&D in every sector of the health care technology industry. The earlier volumes of the Medical Innovation at the Crossroads series, beginning with the first in 1990, have documented, and in several cases anticipated, the effects of the changing health care market upon technology suppliers.

What are those changes? At considerable risk of oversimplification, of reiteration of the now obvious, and of gross disservice to the systematic analyses provided in chapters from earlier volumes of this series (for example, Soper and Ferris, 1992), I offer the following brief sketch:

Health care in America used to be a cottage industry. The adoption and use of health care technology were substantially under the control of several hundred thousand practicing physicians and surgeons. Those physicians and surgeons had strong professional motivations to adopt new technology; they also often had economic incentives to utilize technology.

The health care system that is emerging today has many of the characteristics of a true industrial enterprise. Acquisition of technology is controlled on the basis of its cost and value to the health care delivery firm. There is reluctance to accept technology that is new, or technology whose value has not been compellingly demonstrated. Large purchasers use their buying power to negotiate price. They require suppliers of similar technologies to bid against each other. They may exclude costly technologies altogether. They monitor, and attempt to control, the use of technology by the physicians and surgeons who are part of the enterprise.

THE CHANGING RESEARCH ENVIRONMENT

These changes in the market for health care technology are impacting industrial R&D in three principal ways: (1) they threaten established industry structure, modi operandi, and the financial resources of the technology suppliers; (2) they redefine the criteria for acceptability of new medical technologies; and (3) they impact the processes through which some technologies have historically been developed.

The symptoms of structural and financial stress in the industries that supply



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