Technology needs of the medical device industry

Abstract

With fast-rising health-care costs, reimbursement and outcomes considerations are now key to the technology needs of new products in the medical device industry. Healthcare spending in the United States has grown from $280 billion in 1981 to $1 trillion in 1994, and accounts for 14% of the total gross domestic product. With healthcare costs now increasing at a rate of 4.9% per year, cost containment has become the dominant factor in healthcare policy. As a result, reimbursement has become as prominent an issue for the medical device industry as regulatory changes. For example, fee-for-service reimbursement is being replaced by capitation in many countries. Aggressive pricing has become so predominant in the U.S. private sector that in some instances fees are lower than federally funded Medicare reimbursement rates. It is argued that the irreversible movement to managed care is resulting in fewer, larger healthcare delivery organizations with stronger leverage in the marketplace. Diagnostic laboratories, in turn, are increasing compliance, centralizing laboratories, reducing costs, and increasing their use of automated instrumentation. Outcomes research is also becoming increasingly important in diagnostics. Managed care providers are using technology planning committees to continue their quest for diagnostic technologies which both improve outcomes and decrease costs. The technology needs of the medical device industry include products which will decrease the length of hospital stay, speed test turnaround time, reduce hospital labor, procedural costs, documentation, and scheduling time.