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      TECHNOLOGY ASSESSMENT IN MEDICINE: AN AUSTRALIAN PROPOSAL

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            Abstract

            A large part of the increasing cost of health care services is often attributed to the introduction of new technology. While a review of the literature reveals that the evidence to support this view is ambiguous, it does indicate that the unregulated market fails to discriminate well between effective and ineffective health care technology. In some cases it has permitted the proliferation of medically harmful technology. At present Australia does not have a regulatory mechanism for ensuring the efficient use of new technology. The present paper suggests how such a mechanism could be established and the incentives that would be necessary to encourage the proliferation of only effective and efficient medical technology.

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            Author and article information

            Journal
            cpro20
            CPRO
            Prometheus
            Critical Studies in Innovation
            Pluto Journals
            0810-9028
            1470-1030
            June 1986
            : 4
            : 1
            : 3-24
            Affiliations
            Article
            8629584 Prometheus, Vol. 4, No. 1, 1986: pp. 3–24
            10.1080/08109028608629584
            094888cc-137f-4d8b-823c-b122fed3fc13
            Copyright Taylor & Francis Group, LLC

            All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

            History
            Page count
            Figures: 0, Tables: 0, References: 40, Pages: 22
            Categories
            Original Articles

            Computer science,Arts,Social & Behavioral Sciences,Law,History,Economics
            regulation,cost benefit analysis,federal-state relations,cost control,cost effectiveness analysis,medical technology

            NOTES AND REFERENCES

            1. Sax S.. 1982. . “Australian health care systems and medical technology. ”. In The Management of Health Care Technology in Nine Countries . , Edited by: Banta H. D. and Kemp K. B.. Berlin : : Springer. .

            2. Australia, Report of Committee on Application and Costs of Modern Technology in Medical Practice, AGPS, Canberra, 1978.

            3. There is also a Super Specialty Subcommittee of the Standing Committee of the Health Ministers’ Conference (SCOHM-SSS). Its terms of reference are narrowly defined as the investigation of “highly specialised services that cater for relatively rare diseases or provide unusually complex and costly forms of treatment [that must be] planned on a state wide or nation wide basis”.

            4. D. M. Hailey, Health Care Technology Assessment, Medical Services Division, Commonwealth Department of Health, 1985, mimeo, p. 12.

            5. Fuchs V.. 1972. . “The growing demand for medical care. ”. In Essays in Economics of Health and Medical Care . , Edited by: Fuchs V.. New York : : National Bureau of Economic Research. .

            6. Mushkin S. J. and Landefeld J. S.. 1979. . Biomedical Research: Costs and Benefits . , Cambridge : : Ballinger. .

            7. Scitovsky A. A.. 1979. . “Changes in the use of ancilliary services for ‘common illness. ”. In Medical Technology: the Culprit behind Health Care Costs . , Edited by: Altman S. H. and Blendon R.. p. 39 Hyattsville , MD. : : National Center for Health Services Research. .

            8. ibid., p. 33.

            9. H.D. Banta and S.B. Thacker, Costs and Benefits of Electronic Foetal Monitoring. A Review of the Literature, National Center for Health Services Research, Research Report 79-3245, Washington DC, 1979.

            10. H. D. Banta, ‘Some aphorisms concerning medical technology’ in J.R. Gray and B.J. Jacobs (eds), The Technology Explosion in Medical Science, S.P. Medical and Scientific Books, Spectrum Publications, 1983, p. 86.

            11. Scitovsky, op. cit., p. 54.

            12. Moloney T. W. and Rogers D. E.. 1979. . Medical technology: a different view of the contentious debate over costs. . New England Journal of Medicine . , Vol. 301((26)): 1413––19. .

            13. Warner K. E.. 1979. . “The cost of capital embodied medical technology. ”. In Medical Technology and the Health Care System: A Study of the Diffusion of Equipment Embodied Technology . , Edited by: Warner J.. Washington , DC : : Academy of Sciences. .

            14. Banta, op. cit.

            15. M. Diesendorff (ed.), The Magic Bullet, Society for Social Responsibility in Science, Southwood Press, Canberra, 1976; R. Taylor, Medicine Out of Control: The Anatomy of Malignant Technology, Sun Books, Melbourne, 1979.

            16. T. McKeown, The Role of Medicine: Dream, Mirage or Nemesis?, The Nuffield Provincial Hospitals Trust, Rock Carling Foundation, London, 1976; J. McKinlay et al,‘The questionable contribution of medical measures to the decline in mortality in the US in the twentieth century’, Milbank Memorial Fund Quarterly, 55, 3, 1977, pp. 405–41.

            17. B. J. Richardson, Doctor Supply, Utilisation and Health Outcome: An Economic Analysis, Australian Studies in Health Service Administration No. 49, School of Health Administration, University of New South Wales, 1983.

            18. M. P. Stern, ‘The recent decline in ischaemic heart disease mortality’, Annals of Internal Medicine, 91, 1979, pp. 630-40; L. Goldman and E.F. Cook, ‘The decline in ischaemic heart disease mortality rates’, Annals of Internal Medicine, 101, 1984, pp. 825–36.

            19. Kannel W. B. and Thorn T. J.. 1984. . Declining cardio vascular mortality. . Circulation . , Vol. 70:: 331––6. .

            20. Mushkin and Landefeld, op. cit.

            21. A. Cochrane, Effectiveness and Efficiency, Nuffield Provincial Trust, London, 1972; J.P. Bunker, D. Hinkley and W.C. McDermott, ‘Surgical innovation and its evaluation’, Science, 200, 1978, pp. 937-41; H.S. Frazier and H.H. Hiatt, ‘Evaluation of medical practices’ Science, 200, 1978, pp. 875–8.

            22. Banta H. D. and Russell L. B.. 1981. . Policies towards medical technology: an international review. . International Journal of Health Services . , Vol. 11((4)): 631––52. .

            23. See Banta and Thacker, op. cit. Banta op. cit. also cites gastric freezing, the over use of x-rays and radical mastectomy as further examples where medical procedures have been harmful.

            24. E. P. Steinberg, Nuclear Magnetic Resonance Imaging Technology: A Clinical, Industrial and Policy Analysis, Health Technology Case Study 27, Office of Technology Assessment, Congress of the United States, Washington DC, 1984.

            25. In the economic model of the competitive market, there is a clear link between individual free choice in the market and the maximisation of individual welfare. In the absence of adequate information, this link is severed and the market will fail.

            26. M. V. Pauly, Doctors and Their Workshops: Economic Models of Physicians’ Behavior, National Bureau of Economic Research, Chicago University Press, 1980.

            27. Banta and Russell, op. cit.

            28. J.P. Bunker, J. Fowles and R. Schaffarzick, ‘Evolution of medical technology strategies: I. Effects of coverage and reimbursement’, New England Journal of Medicine, 306, 1983, pp. 620-4; H.D. Banta, C.J. Behney and J.S. Willems, Towards National Technology in Medicine, Springer, New York, 1981; R. A. Derzon, ‘Influences of reimbursement policies on technology’ in B.J. McNeil and E.G. Gravalko (eds), Cultural Issues in Medical Technology, Auburn House, Boston, 1982; S.A. Schroeder and J.A. Showstack, ‘Financial incentives to perform medical procedures and laboratory tests’, Medical Care, 16, 1978, pp. 289–98.

            29. L. B. Russell, Technology in Hospitals, Brookings Institution, Washington DC, 1979; A. Williams, ‘The role of economics in the evaluation of health care technologies’ in A.J. Culyer and B. Horisberger (eds), Economic and Medical Evaluation of Health Care Technologies, Springer Verlag, Berlin, 1983; J.B. McKinlay, ‘From promising report to standard procedure: seven stages in the cancer of a medical innovation’, Milbank Memorial Fund Quarterly, 59, 3, 1981, pp. 374–411.

            30. McKinlay, op. cit.

            31. The ‘human capital’ approach views an individual as the embodiment of future productive capacity. Life is valued by the value of future earnings. This approach is usually adopted in CBA since it is easy to quantify, but is not theoretically satisfactory. ‘Value’ is not always equal to productive capacity (unless ‘production’ is defined to ensure that the statement is tautologically true). One unsatisfactory implication of the approach is that women and children become less valued than men and the most cost beneficial policy with respect to the retired and elderly is to eliminate them! The second, and theoretically more satisfactory, alternative is the ‘willingness to pay’ approach. While this applies the same criterion of value to life as is applied elsewhere, it has proven to be very difficult to use in practical situations.

            32. G. W. Torrance, ‘Social preference for health states: an empirical evaluation of three measurement techniques’, Socio-Economic Planning Sciences, 10, 1976, pp. 129-36; H. Llewellyn-Thomas et al,‘The measurement of patients’ values in medicine’, Medical Decision Making, 2, 4, 1982, pp. 449-62; idem., ‘Describing health states: methodologic issues in obtaining values for health states’, Medical Care, 22, 6, 1984, pp. 543-52; A. Gafni and G.W. Torrance, ‘Risk attitude and time preference in health’, Management Science, 30, April 1984, pp. 440–51.

            33. R. Piatt, ‘Cost containment — another view’, New England Journal of Medicine, 22 September 1983, pp. 726-30; R. W. Evans, ‘Health care technology and the inevitability of resource allocation and rationing decisions, Part 1’, Journal of the American Medical Association, 249, 16, 1984, pp. 2208–19.

            34. J. Richardson, The Costs and Benefits of Extra Billing for Medical Care Services in Australia, Health Economics Research Unit, Australian National University, 1985, mimeo.

            35. It is arguable that the proposal outlined here would result in excessive fees. Doctors with excess capacity (resulting from an oversupply of practitioners) would have a financial incentive to carry out procedures and obtain an average rate of return when they would otherwise obtain nothing.

            36. Over a period of time wages are linked to an increase in average productivity, not simply through industrial tribunals, but by the need for businesses to pay competitive wages. When productivity is less than average, wages must still, ultimately, rise, thereby forcing up prices and causing a contraction of the (inefficient) industry. When productivity exceeds the average, wages do not rise excessively unless trade union pressure causes an undesirable distortion in the market. Rather, relative prices fall, the industry expands, and the benefits of the productivity growth are shared throughout the community. In the present case, the increased productivity of doctors would result in increased consumer benefits per dollar of health expenditure. It is not equitable for doctors to be exempted from contributing their share to increasing community benefits in the way described.

            37. For a discussion of equity and efficiency in the determination of medical fees, see Richardson, op. cit.

            38. Banta and Russell, op. cit.

            39. Hicks R.. 1981. . Rum, Regulation and Riches: The Evolution of the Australian Health Care System . , Sydney : : Australian Hospital Association. .

            40. Blumenthal D.. 1983. . Federal policy towards health care technology: the case of the national centre. . Milbank Memorial Fund Quarterly . , Vol. 61((4)): 584––613. .

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