The National Institute of Health Policys Dialogue Series:

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WELCOME The National Institute of Health
Policys Dialogue Series The Medical Arms Race
Syndrome Where is it going and do we want to go
there? July 13, 2006
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The National Institute of Health Policy
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Technology is growing faster than the health
systems capacity to maximize its value
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It started at the University of Minnesota and in
Earls backyard garage
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Health Care Capital Expenditures in Minnesota,
1993-2004
Source MN Dept. of Health, Health Economics
Program
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Which is the next suburb or exurb to need a new
hospital?
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How many heart, neurosurgery, and cancer centers
do we need in one community?
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Mayo is running short on business
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South Dakota is the capital of specialty surgical
hospitals
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Four (4) MRIs in one square block Lake Wobegon
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While Dick Cheneys ICD works fine, millions of
other anticipated installations may not be worth
their 50,000 price.
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Medical Alley is now LifeScience Alley, but is
still right up our alley
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Congress spends 1 trillion on Medicare
prescription drugs, but no blockbusters have come
on the market in a decade of me-toos
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- Star Tribune op-ed, July 9, 2006
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If not us, who? If not now, when?
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What are your opinions? And who should make the
decisions?
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Assumptions
1 Innovation is a value in healthcare and needs
to be encouraged by policy 2 Appropriate use of
technology depends on the education, information,
motivation and experience of the healthcare
professionals and the information available to
them 3 Market functions that achieve value
between producers and consumers do not exist in
healthcare
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Employers view cost root causes as

• New technologies
• Payment system that encourages utilization
• Supply-induced demand
• Lack of transparency
• Lack of accountability

- Dr. Robert Galvin, GE
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Barriers to value

• Poorly targeted technology diffusion
• Perverse pay incentives
• No accountability for care and resources used
• No accountability for care coordination
• Lack of information and tools to use it
• Inaccurate prices

- Medicare Payment Advisory Commission (MedPAC)
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Conclusions
1 Healthcare costs rise very rapidly, beyond
inflation, and economists conclude that medical
technology is a significant cause of this
increase 2 Government and third parties are
compelled to curb or constrain costs by affecting
the introduction, infusion, or allocation of
technology in ways that may not be healthy
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Work Group Discussions

• Share your experiences with the problems created
  by the medical arms race.
• Help define the policy failures and opportunities
  each community faces
• Define the role system stakeholders can play in
  answering the question, Where is my nearest
  hospital?

Optimizing technology and bringing its full value
to bear on health outcomes in and outside of
the traditional hospital
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Assumptions
1 Innovation is a value in healthcare and needs
to be encouraged by policy 2 Appropriate use of
technology depends on the education, information,
motivation and experience of the healthcare
professionals and the information available to
them 3 Market functions that achieve value
between producers and consumers do not exist in
healthcare
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Conclusions
1 Healthcare costs rise very rapidly, beyond
inflation, and economists conclude that medical
technology is a significant cause of this
increase 2 Government and third parties are
compelled to curb or constrain costs by affecting
the introduction, infusion, or allocation of
technology in ways that may not be healthy
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Topics for Group Discussion

• Medical Technology
• Functioning Market
• Cross-subsidization of Hospital Goods and
  Services
• Health Professional Education, Licensure and
  Reimbursements
• Role of the Purchaser (individual and
  collective/employer)

• Role of the Insurer (public and private)
• Quality, Value and Access
• Capacity of Healthcare Facilities
• The Clinician as Investigator and Innovator
• Role of Government

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Where do the answers lie?
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Communities across the Upper Midwest will be able
to answer these questions.
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Next Steps

• Discussion summary distributed to participants
• We need you to make this series a success
• Series design team
• National conference planning committee May,
  2008

Sign up today, or contact Scott McMahon at
651-962-4613 or shmcmahon_at_stthomas.edu
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Save the Dates
September 29, 2006

• December 12, 2006