Financial impact of medical technology

Abstract

he continuous rise of health-care costs has been troubling Americans for some time, especially the professionals involved in the various stages of medical device lifecycle, e.g., research, development, production, sales, regulation, procurement, maintenance, and disposal. According to the Centers for Medicare and Medicaid Services (CMS), health-care expenditures are expected to reach 18.7% of gross domestic product (GDP) by 2014, while it was only 8.8% in 1980 [1]. Although there is little doubt that technology is essential to providing quality care to patients, its strong impact on the continual rise of healthcare costs has prompted many to question its value and effective management [2]–[6]. A segment of technology that has received much scrutiny is medical devices, which can be divided into three groups: implants (including prosthetic devices), equipment (ranging from defibrillators to surgical robots), and supplies (gloves, catheters, medical gases, etc.). Among the medical devices, equipment has often been singled out probably because of its size, high capital investment, and costly life-long maintenance requirements. Thus, it is not difficult to find studies on specific equipment such as magnetic resonance imaging (MRI), computed tomography (CT) scanners, and radiation therapy equipment [4], [7], [8]. On the other hand, few have analyzed how hospitals manage their entire arsenals of medical equipment in the midst of the delicate balancing act of keeping up with the arms race, ensuring quality of care, and remaining financially viable. This article reports an attempt to understand how acute care hospitals deploy medical equipment using data provided by 174 organizations. In particular, the cost of equipment acquisition and maintenance is compared to those of other medical devices and drugs. Although this sample is small ( 3% of all American hospitals), it is fairly evenly and widely distributed in terms of size, location, ownership, and teaching characteristics. The reason for focusing on hospitals is because hospital care accounts for the largest share ( 31%) of the national health-care expenditure [1]. Although the other segments of health-care industry (e.g., nursing homes, homecare, and personal care) also employ equipment, the hospitals are by far the largest consumers of medical equipment (but not necessarily of other types of devices).