Role of Technology

Introduction

Process of technological change

• Invention versus Innovation

• What is innovation?

• What promotes it?

Role of Patents

• Intellectual property rights• 20 years• Extensions, but max. 14 years useable life

Alternatives to Patents

• Prize– X prize– Netflix prize

– http://www.youtube.com/watch?v=YOjAdjWgtgY

Success of the US in Innovating

• Reasons – Existence of large stock of human capital and

research orgs.– Gov’t support for basic research– Well enforced patent protections– Historically generous 3rd party payers– Extensive subsidy for insurance– Physicians and hospitals motivated to use the

highest tech available.

Diffusion of Technology

• Factors promoting diffusion

• Angioplasty (technological substitute)– Not effective?

• Arms race? Slower diffusion in managed care settings.

Technology and Costs

• How is the contribution of technological change measured?

Technological Change and Costs

• Cost increasing innovation– Technology why not cost saving as in other

industries?– Process versus product innovations– Laparoscopic surgery

• Cost saving innovation– Angioplasty replaces coronary artery bypass

surgery

• Incremental cost-effectiveness analysis

Productive Efficiency

• Compares the quantities of inputs used to produce a given output.– One input can be a patients time.

Price Indices

• CPI

• PPI

• Alternatives Measures for Medical Care– Service price index

The authors systematically reviewed all MEDLINE-cited cost–utility analyses written in English from 2002 to 2007 to identify and describe cost- and quality-decreasing medical innovations that might offer favorable “decrementally” cost-effective tradeoffs—defined as saving at least $100 000 per quality-adjusted life-year lost. Of 2128 cost-effectiveness ratios from 887 publications, only 9 comparisons (0.4% of total) described 8 innovations that were deemed to be decrementally cost-effective.

Decrementally cost-effective.