Medical Device Link.

Originally Published MDDI March 2002

FIRST PERSON

Pamela G. Bailey, president of AdvaMed, is optimistic about clearing the hurdles facing industry in the coming year.

Even as the U.S. economy drifted into recession last year, the overall outlook for our industry has remained extremely positive. This can be attributed to two key characteristics of our healthcare environment—a rapidly aging population in the industrialized world, and the rise of the empowered patient—that suggest there will continue to be a growing demand for innovative, life-enhancing medical technologies.

However, these two trends are not the only factors that will influence the outlook for our industry. Government health policies also will play a major role. For example, most major industrialized nations—the United States included—are increasingly seeking ways to address the rising demand for medical technologies in the face of constrained resources. This has prompted global trends in health technology assessment, reimbursement policy, and regulatory oversight, which could ultimately jeopardize quality patient care and stifle further innovation.

SHRINKING BUDGETS MAKE HEALTHCARE SPENDING AN EASY TARGET

With the projected $5.6 billion budget surpluses of a year ago all but wiped out by the recession and spending on the war on terrorism, the Bush administration and Congress are now faced with making difficult choices about the funding of critical government programs such as Medicare. The promises made on both sides of the political aisle to only use Medicare surpluses to fund a desperately needed overhaul of the program or pay down the national debt have likewise evaporated, and these funds now seem destined to be diverted to other areas.

To soften Medicare's need for these reallocated funds, the government will look to trim the program's costs. This could come by preserving program cuts already passed as part of the Balanced Budget Act of 1997. In this environment, it will be more challenging to secure reforms to improve access to needed medical tests and treatments for the nearly 40 million elderly and disabled Americans who depend on Medicare for quality care.

Yet, these reforms offer part of the solution to tighter budgets. Investment in medical technology actually delivers better, more-efficient care to more patients. Through advances in technology we can detect diseases earlier, when they are easier and less costly to treat, provide more-effective and less-invasive treatment options, and reduce recovery times.

Results of a groundbreaking study released in 2001 showed that, thanks in part to medical technology, the disability rate in America has dropped dramatically over the past five years. According to Kenneth G. Manton, PhD, the current rate of decline—2.6% annually—is saving Medicare billions of dollars and could fully offset the impact that the growing number of older Americans will have on the program. He found that over the past decade, the number of nursing-home residents decreased by approximately 200,000, despite a growing elderly population. This associated drop in nursing-home use (3.5% annually) alone translates into Medicare savings of $18.9 billion.

Studies such as this underscore why efforts to save money by restricting access to new technologies are penny-wise and pound-foolish. Sometimes government healthcare policymakers are tempted to focus solely on the short-term costs of innovative technology and ignore the long-term and indirect benefits. Healthcare policies should be crafted to reflect these benefits and support broader adoption of the innovative medical tests and treatments that can increase healthcare quality and reduce costs over time.

COMMUNICATING THE VALUE OF MEDICAL TECHNOLOGY

To prevent shortsighted health policy changes designed to save a few dollars in the short run, our industry must be positively engaged in every aspect of public policy that relates to medical technology, and continually communicating the many long-term, cost-saving benefits of our products. This requires not only challenging any misguided proposals, but also being constructive in offering alternatives. AdvaMed's goal is to advocate policies that both encourage innovation and complement a patient-centered healthcare delivery system.

The successful campaign to avert the Medicare outpatient cuts underscores the fact that, as an industry, we cannot afford to underestimate the importance of the policies being developed in Washington and other major capitals around the world. Throughout 2002 and beyond, AdvaMed will be engaged on your behalf to ensure that our industry continues to thrive and patients worldwide can benefit from innovative, lifesaving technologies.

Copyright ©2002 Medical Device & Diagnostic Industry