Copyright 1999 The Chronicle Publishing Co.
The San
Francisco Chronicle
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JUNE 11, 1999, FRIDAY, FINAL EDITION
SECTION: BUSINESS; Pg. B1
LENGTH: 900 words
HEADLINE:
Healing That Hurts;
New medical devices are saving
lives but killing health care finances
BYLINE: Tom
Abate, Chronicle Staff Writer
BODY:
New
medical devices may be revolutionizing the field of medicine
and saving lives, but government officials and insurance executives are
increasingly fearful that a steady stream of costly, new medical gadgets could
break the health care bank.
Those concerns took center stage at a
conference yesterday in San Jose attended by some 400 executives representing
all branches of the medical devices industry.
Medical devices encompass a wide variety of hardware
used in the treatment of disease, from a simple blood pressure cuff to the most
sophisticated system for open heart surgery.
U.S. sales of such devices
totaled $17 billion in 1998, according to analyst David Lothson
with PaineWebber in New York. More than 300 medical device
firms are based in the Bay Area, said J. Casey McGlynn, a partner with the
Wilson Sonsini Goodrich & Rosati law firm, which organized the event.
Although the conference treated other topics -- like the difficulty of
raising money, given Wall Street's Internet mania -- several speakers addressed
the question of whether and how government agencies and HMOs might get a handle
on the cost-effectiveness of new medical technologies.
"The good old
days in medical devices, where the doctor wanted it so the
insurers paid for it, that's over," said Susan Bartlett Foote, a former
medical devices lobbyist in Washington, D.C. "The current
environment in Washington is, You cost too much, we have to do something about
it.' "
To illustrate her point, Foote displayed a chart showing
per-capita health care spending in the United States during the past four
decades. In 1960, $141 was spent per person. In 1996, the
latest year for which she had government data, it was $3,781.
Although no one would argue that new medical devices
solely are responsible for that steep rise, a recent report issued by the Public
Policy Institute -- a San Francisco nonprofit think tank -- singled out new
medical gadgets as one of the drivers of health care inflation.
"There
is a strong consensus that technology diffusion -- the development of new
technologies and their introduction into medical practice -- is one of the most
important factors driving health care costs," noted authors Laurence Baker and
Joanne Spetz.
Baker, a health research professor at Stanford University,
and Spetz, a Public Policy Institute economist, went on to suggest that
"policymakers need to consider limiting tech availability in order to restrain
health care cost growth."
To screen new technologies, Spetz and Baker
say lawmakers could revive a program they tried and abandoned in the 1980s that
requires health care providers to get a "certificate of need" proving that their
community needs a new MRI scanner or open heart surgery center.
Although
such proposals remain only conjectural, a top federal health care policy
official at yesterday's conference said his department is considering whether
and how cost-effectiveness testing should factor into deciding whether
Medicare should pay for new medical technology.
"We
want to get more for our money or the same for less," said Jeffrey Kang, a
director of clinical quality with the Health Care Financing Administration.
The agency helps govern the Medicare program, which
pays a huge portion of the nation's medical bills. Kang said lawmakers have
focused on ways to bring the growth in Medicare spending, which
had been running 10 to 12 percent a year, down to more like 2 or 3 percent.
At present, the federal government doesn't have an explicit
cost-effectiveness program, but Kang told the group that he thinks it should be
developed.
The prospect of taking products through new
cost-effectiveness tests, on top of current safety tests by the Food and Drug
Administration, only complicates the job of industry executives. They're already
struggling in a tight market to raise the $20 million it can
take to bring a new device from concept to market.
"There has never been
a more difficult time for medical-device financing," said
Richard Ferrari, chief executive of CardioThoracic Systems in Cupertino.
His company, which already has a technology on the market, illustrates
how the industry keeps inventing new miracles. Ferrari sells a system that
allows surgeons to perform open heart surgery while the patient's heart is
beating.
Up until now, patients who went in for a bypass operation would
be given a drug to slow and eventually stop their heart from beating. At the
same time, they would be hooked up to machine that would fill their lungs with
air and pump blood through their arteries.
Rebounding from that
heart-stopping experience is the most painful part of the patient's recovery.
Ferrari's system essentially is a vice that hold's the patient's beating heart
absolutely still while the surgeon performs the bypass.
Ferrari said his
system costs less than current open heart techniques and allows the patients to
recover more quickly because they never had to have their heart stopped and
restarted.
But his system is a refinement on a current technique, so
it's easier to make direct comparisons. But how would a company prove the
cost-effectiveness of an entirely novel device that wasn't comparable to
anything in the market. Who would make the judgment? Those were the sorts of
questions being asked, but not necessarily answered, at yesterday's conference.
GRAPHIC: PHOTO, U.S. sales of
medical devices totaled $17 billion in 1998,
according to an industry analyst. / Associated Press 1998
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