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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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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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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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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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Representative terms from entire chapter:
care reform
