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Medical Technology and the Health Care System A Study of the Diffusion of Equipment-Embodied Technology A Report by the Committee on Technology and Health Care Assembly of Engineering National Research Council Institute of Medicine NATIONAL ACADEMY OF SCIENCES NAS'NAF Washington, D.C. 1979 U 4 1379 LIBRARY
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the Councils of the National Academy of Sciences, the National Academy of Engineering, and the Insti- tute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with re- gard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee con- sisting of members of the National Academy of Sciences, the Na- tional Academy of Engineering, and the Institute of Medicine. This report represents work under Contract NSF C-3l0 between the National Academy of Sciences and the National Science Foundation. Library of Congress Catalog Card Number 79-84l80 International Standard Book Number 0-309-02865-5 Available from: Office of Publications, National Academy of Sciences 2l0l Constitution Avenue, N.W., Washington, D.C. 204l8 Printed in the United States of America
COMMITTEE ON TECHNOLOGY AND HEALTH CARE CHARLES A. SANDERS (Chairman), General Director, Massachusetts General Hospital MORRIS F. COLLEN, Director, Medical Methods Research, the Per- manente Medical Group AMITAI ETZIONI, Professor of Sociology, Columbia University, and Director, Center for Policy Research CHARLES D. FLAGLE, Professor of Health Services Administration, School of Hygiene and Public Health, the Johns Hopkins Uni- versity GERALD A. GORDON, Director, Center for Applied Social Science, Boston University ANTHONY A. ROMEO, Associate Professor of Economics, the University of Connecticut HENNING E. VON GIERKE, Director, Biodynamics and Bionics Division, Aerospace Medical Research Laboratory, Wright-Patterson Air Force Base WILLIAM S. YAMAMOTO, Professor and Chairman, Department of Clinical Engineering, George Washington University Medical Center MICHAEL ZUBKOFF, Professor and Chairman, Department of Community Medicine, Dartmouth Medical School JUDITH L. WAGNER, Study Director JANE KINSMAN, Consultant MADALYN POLLITT DIANE WEAVER iii
PREFACE This report examines the policy and research issues basic to the relationship between new medical technology and the efficiency and effectiveness of the health care system. The National Re- search Council's Committee on Technology and Health Care, orga- nized jointly in l976 by the Assembly of Engineering and the Institute of Medicine, has assessed the process by which tech- nology finds its way into the health care system, identifying and analyzing successes and failures in the process of technological change. Ideally, the more effective and efficient technologies should be introduced quickly; others should not. The committee has attempted to determine the extent to which these ideal re- sults actually do occur and, when they don't, why not. In our review of the evidence bearing on this question, we have identified areas where more research is needed. SCOPE AND LIMITATIONS The committee limited its inquiry to an examination of "equipment- embodied technology," which is the equipment, procedures, services, or systems that depend primarily upon capital equipment. Fetal monitoring equipment, coronary care units, fiber-optic endoscopic procedures, and medical information systems, diverse though they are, all fall within the study's purview. The study excluded other important technological innovations in health care, such as new therapeutic drugs or new surgical procedures for which par- ticular equipment was not required. As a first approximation of the issues to be addressed, the committee identified a series of questions:
VI â¢ What is known about the relationship of equipment-embodied technology to health care costs and social benefits? Are there categories of such technology that are worth their cost and others that are not? â¢ What factors determine the way decisions are made about the acceptance of new equipment-embodied technology into health care? Are there particular categories of technology that are likely to be adopted too rapidly and uncritically or too slowly? To what extent do current public policies contribute to such problems? â¢ How is information about the effectiveness and efficiency of new technology developed and used? At what stage in the process of technical change is information generated? To what extent does the development and dissemination of information about med- ical technology need to be improved? From the outset the committee decided not to review the state of the art in developing particular kinds of medical technology nor did it attempt to identify significant opportunities for R&D of new technologyâalthough the committee is quite certain such a study could be useful to those federal agencies that are respon- sible for supporting R&D activities. The committee did not ana- lyze the substantial number of issues associated with biomedical research policy, such as the relative merits of targeted versus untargeted investigations or of large grants over small grants, the continuity of research funding, the peer review of research proposals, and the organizational structure or process most con- ducive to innovations in medical technology. These were ruled out for two reasons: The issues had just been considered by the President's Biomedical Research Panel, and the time available for the study of medical technology did not allow for expanding the scope of the committee's work. The committee imposed several additional limitations upon it- self in recognition of the constraints of time and the absence of objective studies on certain topics. Thus, it did not deliberate the technical issues associated with developing equipment-embodied technology, including the need for trained technical manpower or for RSD settings in which the collaboration of medicine and engineer- ing can be most productive.* It did not examine fully the influ- ence of the biomedical electronics and equipment industries on the process of technical change in health care; nor did it evaluate the extent to which the industry determines the directions of *One committee member, William Yamamoto, has taken exception to the limited scope of the study in this connection as well as some of the implications of the conclusions and recommendations. His dissenting view appears as Appendix A.
vii development and distribution of new medical technology or simply responds to the demands and needs of the health care system, mainly because reliable data about the activities of equipment makers are virtually unattainable. Indeed, the committee assumed in its deliberations that new medical technology results largely from the demand expressed in the "market," which, in the case of the health care system, means physicians, hospitals, other provid- ers, and the public. Consequently, the committee assessed the nature of the market signals in some depth and not the extent to which the biomedical equipment industry may be a powerful force in creating a market for its products. Finally, the study did not deal with the issues of ethical and social choices now made possible by the availability of medical equipment to prolong life or the financial costs of such technol- ogy on either the individual patient and the immediate family or the rest of society. Medical technology raises many fundamental questions about previously uncontrolled aspects of life. It pos- sesses an implicit power to redistribute wealth in the society and to confer benefits upon some of the most underprivileged. It en- dows health practitioners with new powers over life and death. It creates new jobs and displaces old jobs. While the committee recog- nizes the differential impacts of technological change on society that medicine now possesses, such ethical and social questions have not been addressed in the study. The committee's main focus has been on the costs and effectiveness of the process of techno- logical change, not on the equity of its consequences. METHODOLOGY The committee, consisting of specialists in engineering, medicine, economics, sociology, and health care administration, met four times to deliberate the issues, reach conclusions, and develop a set of recommendations for policy and research that bear on medi- cal technology. In addition, the committee reviewed a series of study papers that it commissioned. Four of the papers were case studies of particular equipment-embodied technology. The other papers included an analysis of property rights policies related to the introduction of new medical technology, an examination of the impact of state and local regulations on medical technology, and an assessment of the economic cost of equipment-embodied tech- nology. While the commissioned papers provided one of its prin- cipal sources of information, the committee did not always accept or agree with their findings and conclusions. Some of the papers are included here (Appendixes B-G) so that readers may have access to these otherwise unpublished documents.
Vlll The committee held an open meeting to collect the views of con- cerned citizens on the critical problems of technological change in the health care system. The public's views were the subject of another deliberative meeting by the committee. ORGANIZATION OF THE REPORT This report contains an introduction and summary, four subsequent chapters, and appendixes. Chapter 2 reviews what is known about the economic costs of the various types of medical technology. Chapter 3 analyzes the adoption and use of new technology in the health care system, identifying specific factors that may tend to either inhibit or encourage the process. Chapter 4 explores the policy options to deal with the problems in the adoption and use of medical innovations. Chapter 5 discusses the critical question of how evaluative information is generated and disseminated through- out the process of technological change and how that process can be improved. There are eight appendixes to the report. Appendix A is the dissenting opinion of committee member William S. Yamamoto. Ap- pendixes B through G are six commissioned papers to assist the com- mittee in its analysis of the pertinent issues and to provide case studies of particular technologies. Appendix H is a listing of individuals who attended the open meeting on the process of tech- nological change. ANOTHER WORD When this study was undertaken, the committee chairman was Jordan J. Baruch, Professor of Engineering and Business Administration at Dartmouth College. Dr. Baruch and another original member, Karen Davis of the Brookings Institution, left the committee a few months afterward when they were appointed to positions in President Carter's Administration. Three other members left the committee after participating in its initial deliberations. They are Edward Burger, Clinical Assistant Professor at Georgetown Uni- versity Medical Center; Alain G. Enthoven, the Marriner S. Eccles Professor of Public and Private Management at Stanford University; and Walter A. Rosenblith, Provost of the Massachusetts Institute of Technology. The committee is grateful to these people for their incisive ideas in the early months of this study.
CONTENTS INTRODUCTION AND SUMMARY The Process of Technical Change, 3 Summary of Findings and Recommendations, ll 2 ECONOMIC COSTS l4 Concepts of Economic Costs, l4 The Direct Costs of Equipment-Embodied Technology, l5 The Impact of Medical Technology on Total Health Care Costs, l7 The Social Benefits and Costs of New Medical Technology, l9 The Distribution of Costs and Benefits of New Equipment-Embodied Technology, 20 Conclusions, 2l 3 PROBLEMS IN ADOPTION AND USE 23 Theories of Hospital Behavior, 24 X Empirical Evidence on the Diffusion of Equipment-Embodied Technology, 27 % The Impact of the Health Care Financing System on the Adoption and Use of Equipment- Embodied Technology, 33 The Impact of Defensive Medicine on Adoption and Use of New Technology, 39 The Impact of Organization of Health Care Services on Adoption and Use, 39 v Conclusions, 44 ix
4 ALTERNATIVE APPROACHES TO TECHNOLOGY MANAGEMENT 46 ! Funding of Developmental Efforts, 47 Direct Regulation of Introduction of New Equipment-Embodied Technology, 48 -\ Direct Regulation of the Adoption and Use of Equipment-Embodied Technology, 52 i Payment Policies, 56 Health Manpower Policies, 62 Information Dissemination Strategies, 63 A Caveat on the Expansion of Regulatory Programs, 64 \ Summary, 67 5 THE EVALUATION OF EQUIPMENT-EMBODIED TECHNOLOGY 68 What Should Potential Users of Equipment-Embodied Technology Know About Technology?, 68 \ To What Extent Are Existing Procedures for Generating and Using Information on Equipment-Embodied Technology Inadequate?, 75 Proposed Solutions to the Problem, 79 GLOSSARY 85 REFERENCES 87 APPENDIXES A A DISSENTING OPINION William S. Yamamoto 99 B A CASE STUDY OF MAMMOGRAPHY Morris F. Collen l0l C A CASE STUDY OF MULTIPHASIC HEALTH TESTING Morris F. Collen l24 D GASTRIC FREEZINGâA STUDY OF DIFFUSION OF A MEDICAL INNOVATION Harvey V. Fineberg l73
-fE THE DEVELOPMENT AND DIFFUSION OF A MEDICAL TECHNOLOGY: MEDICAL INFORMATION SYSTEMS Donald A. B. Lindberg 20l rF THE IMPACT OF STATE REGULATION ON THE ADOPTION AND DIFFUSION OF NEW MEDICAL TECHNOLOGY Jack Needleman and Lawrence S. Lewin 240 G THE COST OF CAPITAL-EMBODIED MEDICAL TECHNOLOGY Kenneth E. Warner 270 H PARTICIPANTS AT OPEN MEETING, APRIL 7, l977 303 xi