Although medical technology appears to be the driving force behind the rate of increase of real national health expenditures, market imperfections are of greater concern. The market falls short of efficiently allocating health services because of perverse financial incentives and a lack of consumer and physician understanding of the value of many medical services. Making the best use of new and old technology requires better-informed health care decisions, which can help to counter the market imperfections. Cost-effectiveness analysis is presented as one way to assist decisions that must consider the effect of limited resources. Another approach-- medical effectiveness--derives from the lack of knowledge about the impact on patient outcomes of many treatments delivered for specific conditions under the average conditions of care in the community. This lack of knowledge led to the development of the medical treatment effectiveness and technology research activities of the Agency for Health Care Policy and Research. The treatment of medical technologies proposed by health reform legislation and by the National Information Infrastructure initiative is briefly discussed. The paper concludes that wise evaluation of new and old technologies--including information systems--is required to improve our patient outcomes, productivity, and enjoyment of life.

The reason we are at this conference is because, apparently, US Healthcare is facing a crisis, and the administration is trying to develop a new health care policy. The overall goals of this policy, while perhaps not articulated in quite this fashion, seem to be threefold:

Fueled by employer demands to reduce medical costs and legitimized by the Clinton administration's reform proposals, a payer-driven revolution is transforming the U.S. health care industry. The main embodiment of change is managed care, an approach that relies on the health delivery system and the insurance mechanism to affect the cost and utilization of medical services while maintaining a certain level of quality.

Recognizing that technology must play a role in controlling health care costs, the National Science Foundation and The Whitaker Foundation developed a joint grant program, Cost Effective Health Care Technologies. The goal of this novel program, announced in 1993, was to motivate the community to undertake research that addresses the problem of escalating health care costs. Following the receipt of over 350 letters of intent and 106 full applications, 12 projects were funded at a total cost of over $1.4 million. The program was successful in sensitizing the bioengineering community to the need of using technology not only to increase the quality of care but also to contain its costs. If approved by both organizations, the program will be continued for 1994-95.

It is an enigma that the introduction of technology has led to improvements in productivity in practically every area of endeavor except the field of medicine. This paper asserts that properly applied technology, based on a systems engineering approach, can help reduce the cost while maintaining the quality of health care delivery. Achieving this goal will require more cooperation and coordination at the Federal level to insure that a focused systems approach is used in applying and developing technology that will lead to cost reduction. It is further asserted that much of the technology that could help reduce costs resides in the DoD and the DOE and has not historically been of prime interest to the NIH. Several dual use applications are presented that show how defense related technology can benefit the field of medicine. A new approach to a national initiative to applying technology to reduce health care costs is proposed. The steps in such an approach are first to develop a health care systems architecture and identify the key cost drivers. Then, to define technology roadmaps so that critical technical issues can be addressed on a priority basis using a focused systems approach to the problem. Implementation of this national initiative will require multi-agency funding and coordination, perhaps through OSTP or NSTC. This means that agencies must work together as never before, and that technology is made available and funded by whatever agency or source is capable of supplying the technology. Finally, a framework, called GUILDS (Government, Universities, Industry, Laboratory Development), is proposed to facilitate the formation of teams comprising medical research institutions, industry, national laboratories, and government agencies to develop the technology required. A National Biomedical Engineering Virtual Collaborative Environment is proposed to be established immediately to serve as a focal point for coordinating the GUILDS involved in this initiative.

This paper provides an assessment of the incremental expected costs of increasingly sophisticated generations of cardiac pacemaker technology. A decision analytic framework is used to calculate expected costs of pacemaker therapy over a five-year period, taking into account failure rate estimates for the various generations, device replacement costs, hospital fees, physician's fees, follow-up care, and patient lost time in follow-up care. For five years of pacing therapy, the incremental cost difference between nonprogrammable and multiprogrammable is $1887; between multiprogrammable and dual-chamber is $3321; and between dual-chamber and dual-chamber rate-responsive is $676. Incremental benefits were found extremely difficult to quantify, monetarize, or translate to a scale for comparison with costs. However, medical literature indicates a decreasing level of risk for mortality and morbidity, owing to increased hemodynamic benefits from the more recent generations of high technology pacemakers.

One of the reasons there is not a simple answer to this question resides in a lack of clarity in definition of some of the key words involved. The first of those words is cost. Cost when used in the context of technology and health care organizations is defined in a variety of ways. One way is the actual purchase price and other direct expenses related to the technology in question. These are probably the easiest to identify and quantitate. The picture becomes murky as we move into other definitions, for example cost in use takes into account not only direct cost but indirect which is accounted for differently by different health care organizations.

Five critical questions apply when evaluating the cost of healthcare technology: Who is asking the question (of how to evaluate healthcare costs)? For what purpose? What is the nature of the decision that must be made? At what state of a technology’s development and diffusion are the questions being posed? What type of technology is stimulating the questions? A large number of organizations, both national and international, are engaged in technology assessment, and constructive disagreement improves the overall quality of those assessments. Current cost measurement tools such as cost-utility analysis, cost-benefit analysis, cost-effectiveness analysis, and outcomes research are weak and ineffective. Recently, pharmaceutical manufacturers have adopted more global cost-effectiveness studies. Technology assessments will ultimately focus on examining the relative cost-effectiveness of alternative technologies for a specific pathology or DRG. In addition to the traditional healthcare facility—hospital, outpatient facility, or group practice, group purchasing organizations are also asking about cost-effectiveness of healthcare. ECRI’s SELECT’” process, unlike less effective technology assessments, takes into account real- world user experience data and life-cycle cost (LCC) analysis in addition to detailed comparisons of technical features and performance.

The costs of health care increased from $27 billion in 1960 to $900 billion in 1993. During this time, nominal spending (not adjusted for inflation) rose on average 11.2 percent a year. Four factors account for the increase. Population growth was responsible for about nine percent of the increase, while inflation in the general economy was responsible for an additional 42%. These factors are generally regarded as beyond the control of hospitals and other providers. Increases in the price of medical goods and services above the general rate of inflation were responsible for 25 percent of the growth, with the remaining portion of the increase due to increases in the utilization and intensity of services furnished. Medical price inflation and increases in service use together, therefore, were responsible for almost 50 percent of the growth. Both of these factors are potentially within the control of the health care industry. Technology is a major contributor to both medical price inflation and increased utilization and intensity. While attention is frequently focused on the cost of new technology, the continued diffusion and utilization of existing technologies may be a more important contributor to cost escalation. An annual analysis done by the Prospective Payment Assessment Commission (ProPAC) has demonstrated that the added costs of quality of care enhancing new technology and scientific advances adds only about half of one percent each year to the cost furnishing inpatient hospital care to Medicare beneficiaries. In addition, many of the technologies included in this analysis are not entirely new, but have been available for a number of years. The utilization of these technologies, such as MRI, thrombolytic therapy, and implantable defibrillators, continues to increase each year, adding to the growth in spending. Other well established technologies, such as CAT scanning, diagnostic ultrasound, radiation therapy, and cardiac catheterization, also continue to diffuse, with annual increases in utilization. While some technologies, such as dialysers, have led to substantial improvements in productivity, many technologies do not appear to have contributed to efficiency increases. In some cases, new technology has allowed a simpler, less costly procedure to substitute for a more costly procedure. Examples include advances in cataract surgery, arthroscopy, and laparoscopic cholecystectomy. In each of these cases, however, while the payment for each unit of service has decreased, the number of services furnished has increased, resulting in overall growth in spending. Much attention has been focused on lowering costs of health care, including the title of this session. In fact, policy makers are not considering proposals to lower health care costs. Their goal is more modest: to allow the rate of increase in spending. Total health care spending has been growing at about four to five percent per capita above general inflation. Most health reform proposals, including the one proposed by President Clinton, would set a long-term spending growth target related to the growth in the gross domestic product (GDP). Such a target would allow real per capita spending to grow about 2 percent a year, rather than the current increase of four to five percent a year. Such a target could be tough, but not impossible, to achieve. It is not clear, for example, why the costs of labor and many supplies in the health care sector should continue to grow at rates substantially faster than in the general economy. There is also evidence of substantial excess capacity in the supply of many technology-intensive services. It is likely that a more rational distribution of technologic capacity could result in economies of scale and cost savings. Since excess service capacity has been shown to stimulate additional demand for care, reducing excess capacity could also help control inappropriate utilization. Further, there is substantial research demonstrating that concentration and specialization in the delivery of some technology-intensive procedures is associated with spending reductions as well as improved quality of care. Is there a conflict between improved health care delivery and controlling the growth in health care spending? Not necessarily. The most stringent health care reform proposals would decrease the rate of spending growth by two to three percent a year from historical levels. The key issue is how providers, physicians, and suppliers would respond to revenue constraints. The costs of labor and supplies can be held to levels in the general economy. Increased concentration of complex procedures can lower cost growth, while improving quality of care. Physicians and other providers can make good decisions regarding the allocation of limited resources, when given the incentives to do so, together with timely information on medical appropriateness. Concerns about the cost of technology, however, should not focus primarily on new advances. Technologies in their first few years of diffusion account for only a small share of spending increases, and undue attention to new advances could have deleterious effects on innovation. Instead, the focus should be on using existing technology more efficiently and productively and eliminating utilization that is of marginal or no value in improving quality of care.

The perception of MRI as the technology flagship of diagnostic imaging has generated an "arms race" in terms of hardware development, search for academic recognition and physician utilization, all this leading to excessive costing of what is a basically sound and useful technology. Governmental regulation has been unable to deal with cost issues, and in some cases has added cost. The pressure of reality is now driving the process of rationalizing costs. Lower costs will not negatively impact on diagnostic capabilities of MRI.

Despite the remarkable advances conferred to the health care system, technological innovation is often pointed out as an important "culprit" behind the astonishing increases in medical care expenditures. Until cost constraint became an issue of national significance, innovations that offered any potential health benefit rapidly diffused within the United States medical community - indifferent to the amount of resources expended. This pattern of adoption was driven by generous coverage policies of third-party payers that frequently did not require proof of effectiveness for reimbursement. Recently, attention has turned to the outcomes evaluation of medical interventions; assessing not only patient safety, but critically examining the risks and benefits, measured in clinical benefits and resource costs.

Laser and optical technology could greatly benefit health care during the 1990s. The present understanding of laser-tissue interactions and rapidly developing technological capabilities suggest a wide range of possibilities. The intention is to make medical care and surgery safer, faster, less invasive, and less expensive. Long in-patient procedures may become brief, out-patient procedures; presendy impossible procedures may become possible. These were previously fantasies, then goals, and now, expectations.

The cost of health care is a major economic issue and policy concern in the United States today. It is clear that expenditures have been increasing more rapidly than the rate of growth of our gross domestic product. The escalation of costs is a result of an increase in number, intensity, and/or expense of services. The evidence forces the inescapable conclusion that this situation cannot long be maintained. Nevertheless, there is reason to believe that a greater efficiency in the system is possible, perhaps permitting the provision of higher quality care with fewer resource.demands. Some increase in efficiency may result from the proper application of technology assessment.

In 1993 the National Science Foundation (NSF) and The Whitaker Foundation (WF) jointly supported an experimental initiative entitled “Cost Effective Health Care Technologies”. The broad goal of the 1993 program was to “promote innovative multidisciplinary research that can contribute to the containment or reduction of health costs without compromising the quality, effectiveness or accessibility of the health care system”.1 Proposals were required to contain a section which “describes as quantitatively as possible” the expected impact of the research results on the cost-effectiveness goal of the program — a new parameter for research methodologies. Twelve projects in the categories of Information and Systems, Medical Devices, and Biomaterials were funded. A modified program, “Cost Reducing Health Care Technologies”, is planned for Fiscal Year 1995. Insights gained in the planning, conduct, and follow-up review of the 1993 experimental biomedical engineering research grant program provide useful background information on “The Role of Technology in the Cost of Health Care”. The desirability is indicated for engineers to participate in the development of a credible and robust technology assessment process at the basic and applied research stages of health care technology development.

One of the most powerful forces affecting the success of health reform in the United States is information technology (IT). The integration of medical technology (such as imaging) with IT (such as the electronic medical record, guidelines, care paths and outcomes research) provides the opportunity to simultaneously improve the quality of health care and control health care cost inflation. The effective integration of medical technology with IT has the potential to achieve clinically appropriate and cost effective medical care in the appropriate location with the support of technologically delivered guidelines and using telemedicine applications such as telediagnosis, teleradiology, and telemonitoring. These savings will provide the investment and research funding to enable the United States to continue as the world’s leader in medical technology and telemedicine. This paper validates the potential for these benefits from the effective integration of clinical IT and medical technology with a case study of the progress achieved at Harvard University Health Services(HUHS).

On October 18, 1991, the IEEE-USA produced an entity statement which endorsed the vital importance of the High Performance Computer & Communications Act of 1991 (HPCC) and called for the rapid implementation of all its elements. Efforts are now underway to develop a Computer Based Patient Record (CBPR), the National Information Infrastructure (Nil) as part of the HPCC, and the so-called "Patient Card". Multiple legislative initiatives which address these and related information technology issues are pending in Congress. Clearly, a national information system will greatly affect the way health care delivery is provided to the United States public. Timely and reliable information represents a critical element in any initiative to reform the health care system as well as to protect and improve the health of every person. Appropriately used, information technologies offer a vital means of improving the quality of patient care, increasing access to universal care and lowering overall costs within a national health care program. Health care reform legislation should reflect increased budgetary support and a legal mandate for the creation of a national health care information system by: Constructing a National Information Infrastructure; Building a Computer Based Patient Record System; Bringing the collective resources of our National Laboratories to bear in developing and implementing the NIl and CBPR, as well as a security system with which to safeguard the privacy rights of patients and the physician-patient privilege; Utilizing Government (e.g. DOD, DOE) capabilities (technology and human resources) to maximize resource utilization, create new jobs and accelerate technology transfer to address health care issues.

Innovative technologies have dramatically reduced the risk/benefit ratios of health care. These reductions have led to marked growths in health care utilization resulting in the spiraling increases in health care costs. With minimal risks, when health care becomes necessary is not obvious. With innovative technologies, the question regarding health care delivery has changed from “Can it be done?” to “Should it be done?” Physicians do not currently have the information necessary to answer this question. Quality of care issues must replace risk/benefit ratios as the new paradigm for a physician’s ordering of health care delivery. Quality of care issues include: medical indication, minimizing risks, cost efficiency and patient satisfaction. Much of health care delivered today lacks the warrantedness and efficacy components of medical indication making it unnecessary. New and, as yet, undeveloped information systems must provide information on all quality of care issues to physicians so appropriate decisions regarding health care delivery can be made. With this information, quality of care will improve and large portions of current health care delivery will be found unnecessary or nonessential. Consequently, information systems can serve to control health care costs and to improve quality of health care.

Health Care Reform has been the focus of national attention for the past 2 years. Issues in the forefront of health care delivery which must be solved include the escalating cost of delivering high quality health care, inadequate access to primary and specialty care to segments of both rural and urban America, and the duplication of expensive facilities because of the inability of the infrastructure to enable the sharing of these facilities. Individuals who are geographically distant or residing in inner city neighborhoods of large metropolitan areas have little or no access to the most basic medical care, let alone tertiary care centers. As but a few examples, in some regions seven days are required for a general practitioner to receive an x-ray report from a radiologist, an increasing number of small towns do not have physicians or even physician assistants in residence, and many do not have 911 services.

Three examples illustrate how technology can enable policies and programs that may produce significant net savings in health care.

"We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness." I am sure you recognize these words from the opening sentences of the Declaration of Independence.

The role of technology in the cost of health care is a primary issue in current debates concerning national health care reform. The broad scope of studies for understanding technological impacts is known as technology assessment. Technology policy makers can improve their decision making by becoming more aware, and taking greater advantage, of key trends in health care technology assessment (HCTA). HCTA is the systematic evaluation of the properties, impacts, and other attributes of health care technologies, including: technical performance; clinical safety and efficacy/effectiveness; cost-effectiveness and other economic attributes; appropriate circumstances/indications for use; and social, legal, ethical, and political impacts. The main purpose of HCTA is to inform technology-related policy making in health care. Among the important trends in HCTA are: 1) proliferation of HCTA groups in the public and private sectors; 2) higher standards for scientific evidence concerning technologies; 3) methodological development in cost analyses, health-related quality of life measurement, and consolidation of available scientific evidence (e.g., meta-analysis); 4) emphasis on improved data on how well technologies work in routine practice and for traditionally under-represented patient groups; 5) development of priority-setting methods; 6) greater reliance on medical informatics to support and disseminate HCTA findings.

We have established the Merged Cardiac Registry (MCR) containing over 100,000 cardiovascular surgery cases from 47 sites in the U.S. and Europe. MCR outcomes data are used by the contributors for clinical quality improvement. A tool for prospective prediction of mortality and stroke for coronary artery bypass graft (CABG) surgery (83% of the cases), known as RiskMaster, has been developed using a Bayesian model based on 40,819 patients who had their surgery from 1988-92, and tested on 4,244 patients from 1993. In patients with mortality risks of 10% or less (92% of cases), the average risk prediction is identical to the actual 30-day mortality (p > 0.37), while risk is overestimated in higher risk patients. The receiver operating characteristic (ROC) curve area for mortality prediction is 0.76 ± 0.02. The RiskMaster prediction tool is now available online or as a standalone software package. MCR data also shows that average mortality risk is identical for a given body surface area regardless of gender. Outcomes data measure the benefits of health care, and are therefore an essential element in cost/benefit analysis. We believe their cost is justified by their use for the rational assessment of treatment alternatives.

“Cost shifting” occurs when there is not a fair or accurate match of the payment and use of medical services. A common “cost shifting” occurs when an insured patient is charged more to cover free services provided to an uninsured patient. This paper documents the multiple negative consequences of the many categories of cost shifting, reviews forces which are leading both to an increase and decrease in the magnitude of cost shifting, and evaluates the consequences of cost shifting on the goals of U.S. health care reform and investment in medical technology. Policy to minimize the negatives consequences of cost shifting is recommended.

Good morning! VHA Iowa is an alliance of 14 hospitals, ranging in size from 15 average patient census to 300 average patient census. It operates 11 mobile medical diagnostic units ranging, in terms of technology, from echocardiography to magnetic resonance imaging (MRI) to lithotripsy, serving 65 client hospitals in 4 states. We also operate Iowa Medical Waste Reduction Center, which is a regional infectious waste treatment program, and, we are in the beginning stages of forming VHi Rehabilitation Services, L.C., to provide various types of rehabilitation therapy services to smaller hospitals, nursing homes, and businesses.

Startups in the medical device industry have made major advances to medical technology. Today the ability to fund these companies is being adversely effected by the difficulty in accessing capital. The capital markets had been disrupted by uncertainty about healthcare reform and by changes in the FDA regulatory process. Both of these have adversely effected market valuations for medical device companies. In the area of healthcare reform confusion over the form and impact of these proposals as well as more stringent reimbursement policies have had a significant impact oh who gets funded today. For instance, capital goods and manufacturers with innovative ideas are no longer able to access venture capital. The FDA regulatory process has also had a severe impact on the medical device industry. The lack of clarity over the last several years in administering FDA policy, the increase in clinical data required for regulatory approval and the increase in time and expense associated with regulatory approval have all worked together to make it more difficult for medical device companies to be successful today. There are a number of unpleasant but real stories out there where the FDA has used and abused its powers in a way which has had a significant adverse effect on medical device companies and their shareholders. Some of these stories focus on FDA warning letters, others on the time delay at the FDA to obtain approval. These changes at the FDA have increased the cost to get regulatory approval, slowed the introduction of better medicine and caused a movement of technology, jobs and new companies to Europe. Although there is little that can be done in the short-term to change the policies of the FDA, there are a number of things which can be done by medical device companies to better cope with the world they live in. In the clinical area, these would include bringing in regulatory expertise earlier, making sure that a product's technical performance translates into clinical and economic outcomes and by applying increased scientific rigor to clinical trials. From a management standpoint, companies should not rush to the market or commit too early to infrastructure and they should consider international markets because of the friendlier regulatory environment, lower barriers to entry and tax advantaged legal structures.

The collection and evaluation of sound clinical data are the basis of the approval process for many medical devices. This paper outlines those topics that a sponsor must carefully consider in an effort to provide a meaningful evaluation and interpretation of clinical data in support of medical device Premarket Approval applications (PMA).1-3

The determination of whether a drug or medical device is safe and effective requires statistical proof of valid clinical trial information. Quantitative biostatistical measures from anatomic and functional medical images are now providing objective and reproducible measures of drug and device effects. These highly precise biostatistical measures can be used to quantitatively analyze the efficacy and occasionally the safety of these drugs and devices. Since medical imaging information is digital, or is readily digitized, it can be visualized and measured in a variety of ways to evaluate the validity of the data. Moreover, with advanced image processing and data visualization tools, this information can be electronically organized and submitted directly to the U.S. Food and Drug Administration (FDA) reviewer. Biomedical imaging and computer-based data visualization technologies have the ability to substantially decrease the time required for clinical development and regulatory review while providing more valid data.

An FDA perspective on some of the problems encountered during the device review process is described. Emphasis is placed on the need for communication and teamwork among all parties to make the system woik. Manufacturers are encouraged to "Do it right the first time." Pertinent questions are asked of the manufacturers and proposed solutions are presented. Day to day reality at FDA is described and document workload is revealed. Lack of regulation, or more appropriately, when less regulation is appropriate is discussed. FDA has distributed to manufacturers a new draft guidance document to help in the decisionmaking process and when to submit a 510(k) when modifications are made to a device. This and other mechanisms are in place at the FDA to streamline the review process. Manufacturers are cautioned about their decisions and to seek advice from qualified persons. FDA emphasizes that help is available and that when in doubt, call.

The focus of FDA regulation on medical devices has changed substantially since its beginning in 1976. The earliest focus of GMP inspections was education of both the Industry and the Agency. Approval of new products through the 510K Premarket Notification process was generally achieved within the regulatory intended time of ninety days. Agency evaluation of 510K applications was focused on comparison to approved devices. All this has changed. The focus of GMP inspection today is enforcement. Sometimes that enforcement is targeted and sometimes it is arbitrary and capricious. Companies have been shut down and warning letters are now frequent. Some of this focus change has been warranted. Industry has been slow in its efforts to become fully GMP compliant. Approvals of 510K’s are taking much longer. The FDA’s backlog is now one year. The number of submissions has not grown substantially in the last few years, rather the process has become much slower. The amount of detail requested has, in some cases, exceeded any reasonable expectation I might have had. Current trends, if continued, represent a threat to an innovative and competitive Device Industry. Current trends are explored and changes recommended to bring about a better balance between the Agency and the Industry. The focus of FDA regulation on medical devices has changed substantially since its beginning in 1976. The earliest focus of GMP inspections was education of both the Industry and the Agency. Approval of new products through the 510K Premarket Notification process was generally achieved within the regulatory intended time of ninety days. Agency evaluation of 510K applications was focused on comparison to approved devices.

Increased government regulation of the medical device industry produces higher expenses, a longer time to return investment capital, and greater uncertainty. As a result there are fewer new ventures and reduced efforts to develop new technology in established companies. The current federal regulatory framework has shifted from monitoring the product to monitoring the process. The inability to reach perfect performance in a such a regulated environment subject to continuous and fluid interpretation guarantees non-compliance and growing ethical tension. Without new medical technology, we may be unable to maintain quality medical coverage in the face of rising demand. The author proposes risk assessment to set regulatory priorities; the conversion of a national weapons lab to a national device testing lab; the establishment of device standards and the monitoring of in-use performance against these standards; and the education of patients and users as to the results of these examinations.

The cost of securing FDA approval has long been an important consideration in funding projects involving new medical technologies, but the more stringent regulatory behavior of the FDA in the past few years has led to a discernable decrease in the funding of start-up medical device companies. An abundance of anecdotal evidence, supported with surveys of venture capital firms, investment groups and medical device corporations, indicates a serious shortage of funds available for the development of certain medical technologies.

Public safety can be enhanced through the development of a comprehensive medical device risk management. This can be accomplished through case studies using a framework that incorporates cost-benefit analysis in the evaluation of risk management attributes. This paper presents a framework for evaluating the risk management system for regulatory Class III medical devices. The framework consists of the following sixteen attributes of a comprehensive medical device risk management system: Fault/Failure Analysis Medical Literature Surveillance Premarket Testing! Device/Patient Registries Clinical Trials Device Performance Monitoring Post-Approval Studies Returned Product Analysis Manufacturer Sponsored Autopsy Program Hospital Studies Emergency Treatment Funds/ Product Labeling Interim Compensation Establishment Inspections Product Liability Problem Reporting Program Alternative Compensation Mandatory Hospital Reporting Mechanisms Review of performance histories for several medical devices can reveal the value of information for many attributes, and also the interdependencies of the attributes in generating risk information flow. Such an information flow network is presented as a starting point for enhancing medical device risk management by focusing on attributes with high net benefit values and potential to spur information dissemination.

Regulation of the health care industry and development of drugs, biologies and devices has developed, in part, to ensure public safety. There are numerous forces that promote regulatory efforts and those that work against formal regulatory measures. This presentation provides an overview of the following: What is risk? What is risk assessment? What drives regulatory activity to ensure public safety? What are the issue areas surrounding cost benefit analysis? How is technology helpful in assessing and managing risks? How does health care reform drive new technologies which, in turn, must be assessed for risk and cost/benefit? A force field analysis model of factors contributing to regulatory activities and those that work against the promulgation of regulations is offered.

At three months and at one year following completion of a formal training course in laparoscopic urologic surgery, course participants were surveyed as to their interim laparoscopic experience. Data regarding practice setting, subspecialization, course attendance (alone or with a partner), nature and training of surgical assistant, and additional training subsequent to the course was collected. These variables were then correlated with information on the number and nature of surgical complications encountered subsequent to the course. In the three months following course completion, surgeons who performed clinical procedures without additional training were 3.39 times more likely to have at least one complication compared to surgeons who sought additional training (p = 0.030). One year following course completion surgeons who had attended the training course alone, were in solo practice, or performed laparoscopic surgery with a variable assistant, were, respectively, 4.85, 7.74, and 4.80 times more likely to have had a complication than their counterparts who attend the course with a partner, were in group practice, or who operated with the same assistant (p = 0.004, p = 0.001, and p = 0.002). At both three months and one year following training, laparoscopic complication rates of individual surgeons (number of complications/number of cases) demonstrated a highly significant inverse correlation with the number of laparoscopic procedures performed. These data suggest that the rate of complications associated with the clinical “learning” curve can be decreased by additional education following an initial course in laparoscopy. An ongoing clinical association with surgeons performing similar procedures appears to decrease long-term complication rates. Findings from this study argue for the regulation of the clinical application of new surgical skills acquired in the post-residency setting, and maintenance of the new skills through continuing medical education.

Training and education can increase the effectiveness with which new technology can be introduced in medicine. However, the use of technology in the education and training itself can be the vehicle for that increased effectiveness. The most effective way that education and training can be improved by technology is the through the use of simulation. Examples are given from, first, the historical perspective in aircrew and spacecrew flight training; an anesthesiology training simulator; and a laparoscopic surgery training simulator.

Thank you for inviting me to discuss with you today about issues that are so pertinent to us all, the impact of governmental regulations on health care technology. Our particular workshop put emphasis on how the training and education can increase the effectiveness of technology introduction. It is a necessity to know and to understand (the regulatory processes), the scientific requirements and how to introduce medical devices into the U.S. market. Let me relate Food and Drug Administration's (FDA's) regulations by addressing the 6 Ws - why, when, what, which, who and where.

The core problem with the U.S. health care system is — it already costs too much and the rate of its cost growth is cause for further alarm. To deal with these, regulators must introduce incentives for health care providers to reduce costs and introduce incentives that make consumers of health care services concerned about the costs of the services they demand. Achievement of these regulatory goals will create opportunities for the introduction of innovations, including revolutionary new technology, that can lead to major reductions in costs. Modeling of health care system inputs, outputs, transactions, and the relationships between these parameters will expedite the development of an effective regulatory process. This model must include all of those major factors that affect the demand for health care and it must facilitate benchmarking health care subsystems against the most efficient international practices.

Sandia National Laboratories and Kaiser Permanente (Southern California Region) are teaming to develop a prototype computer-based model for analyzing health care delivery systems. The ultimate goal is produce a model and a methodology that can be extended to cover all the essential aspects of a large health care organization and to be able to predict the effect of medical and administrative policies on the performance of that organization. The initial two-year feasibility study will model a subset of Kaiser Permanente's operations to understand the critical technical and administrative issues. Health care has been identified as a major national concern for economic competitiveness. Although as an industry, health care is nearing revenues of one trillion dollars per year, the use of information management technologies to understand and control these costs is in its infancy. Sandia and Kaiser Permanente will combine the technologies of advanced information modeling, object oriented software design, distributed computing (both LAN and WAN), and expert database systems into an integrated health care management tool. The tool will provide top down simulation of processes and procedures along with their outcomes (both at the patient level and aggregated across all patients) and costs. For example, the effect of a change in the preferred practice for cholesterol screening will effect the distribution of outcomes for individual patients, the need for screening facilities of the health care provider, and the need for other facilities and resources for the provider based on results (or lack thereof) of the screening. Information modeling and object oriented software design will be used to capture and simulate the health care system. The distributed computer system will be the system already existing and planned by the health care provider that includes both same site and between site communications plus a heterogeneous mix of workstations. The expert database systems will be used to gather and check information residing across this system, both to look for similarities between individual patient cases, aggregate data for epidemiological studies, and identify and study data trends.

There are few systems which aggregate standardized pertinent clinical observations of discrete patient problems and resolutions. The systematic information supplied by clinicians is generally provided to justify reimbursement from insurers. Insurers, by their nature, are expert in modeling health care costs by diagnosis, procedures, and population risk groups. Medically, they rely on clinician generated diagnostic and coded procedure information. Clinicians will document a patient's status at a discrete point in time through narrative. Clinical notes do not support aggregate and systematic analysis of outcome. A methodology exists and has been used by the US Army Drug and Alcohol Program to model the clinical activities, associated costs, and data requirements of an outpatient clinic. This has broad applicability for a comprehensive health care system to which patient costs and data requirements can be established.

The U. S. Department of Energy (DOE) Idaho National Engineering Laboratory (INEL) has four programs directly supporting the Clinton Administration’s Health Care and National Information Infrastructure initiatives. An Idaho Medical Information Consortium (IMIC) was formed to leverage DOE and private sector resources to provide improved health care to rural regions. A DOE/INEL cooperative relationship with the Medical University of South Carolina was established. A commercial radioisotope production facility based on an operating INEL reactor has been proposed. A proposal to privatize a dormant INEL nuclear reactor for conversion to a clinical brain tumor treatment facility is under consideration by DOE.

The potential exists to reduce or control some aspects of the U.S. health care expenditure without compromising health care delivery by developing carefully selected technologies which impact favorably on the health care system. A focused effort to develop such technologies is underway at Sandia National Laboratories. As a DOE National Laboratory, Sandia possesses a wealth of engineering and scientific expertise that can be readily applied to this critical national need. Appropriate mechanisms currently exist to allow transfer of technology from the laboratory to the private sector. Sandia's Biomedical Engineering Initiative addresses the development of properly evaluated, cost-effective medical technologies through team collaborations with the medical community. Technology development is subjected to certain criteria including wide applicability, earlier diagnoses, increased efficiency, cost-effectiveness and dual-use. Examples of Sandia's medical technologies include a noninvasive blood glucose sensor, computer aided mammographic screening, noninvasive fetal oximetry and blood gas measurement, bum diagnostics and laser debridement, telerobotics and ultrasonic scanning for prosthetic devices. Sandia National Laboratories has the potential to aid in directing medical technology development efforts which emphasize health care needs, earlier diagnosis, cost containment and improvement of the quality of life.

The cost of medical care in the United States is deemed to be excessive by government and business. The causes for this high cost of care are multiple, but the argument that technology is the leading cause has been made. It is argued here that technology, properly employed, can actually be a major component of the solution to rising to health care costs. Because the National Laboratories are a repository for many of the technologies needed to lower health care costs while improving health care quality, a national effort linking these laboratories with university and other academic medical centers, industry, and the National Institutes of Health should be undertaken. The development of a technology roadmap for health care technologies is an important part of this effort.

Medical costs in the U.S. today represent about 13% of the gross domestic product; for the year 2000, the estimate is a 20% impact on the U.S. economy. The Clinton Administration has singled out health care as a top priority issue that needs near-term resolution to help avoid a severe economic problem. The DOE national defense laboratories can propose a bold and comprehensive medical initiative for which high technology leads to greatly lowered medical costs for the general public and which we define here as Center for Advanced and Cost-Effective Health-Care Technologies (CACHET).

Modeling, Simulation, and Analysis are special competencies of the Department of Energy (DOE) National Laboratories which have been developed and refined through years of national defense work. Today, many of these skills are being applied to the problem of understanding the performance of medical devices and treatments. At Sandia National Laboratories we are developing models at all three levels of health care deliveiy: 1) phenomenology models for Observation and Test, 2) model-based outcomes simulations for Diagnosis and Prescription, and 3) model-based design and control simulations for the Administration of Treatment. A sampling of specific applications include non-invasive sensors for blood glucose, ultrasonic scanning for development of prosthetics, automated breast cancer diagnosis, laser burn debridement, surgical staple deformation, minimally invasive control for administration of a photodynamic drug, and human-friendly decision support aids for computer-aided diagnosis. These and other projects are being performed at Sandia with support from the DOE and in cooperation with medical research centers and private companies. Our objective is to leverage government engineering, modeling, and simulation skills with the biotechnical expertise of the health care community to create a more knowledge-rich environment for decision making and treatment.

Because of the needs of nuclear weapons development, Los Alamos has been a leader in physics-based computer modeling throughout its fifty-year history. Over the last decade we have developed detailed large-scale systems- level finite-event simulations, including people, for military engagements and campaigns. We have independently pioneered many object-oriented techniques. Our current research emphasizes simulations composed of intelligent actors. One current prototype activity is building a simulation of health care at the individual person level for the State of New Mexico. We are eager to share our extensive experience, methods and capabilities with the health care community.

The Air Force Surgeon General has established the Office for Prevention and Health Care Assessment (OPHSA) to become the center of excellence for preventive services and health care assessment in the U. S. Air Force and the Department of Defense. OPHSA using the principles of total quality management and integrated teams will evaluate, compare, and modify preventive services delivery guidelines to preserve the fighting force by preventing illness and injuries in military populations. OPHSA will evaluate and formulate health care-delivery guidelines to improve health care access and delivery to military patient populations. OPHSA will develop data to determine the health status and health needs of beneficiary populations so medical managers can delivery medical care in the most cost effective manner. OPHSA is located at Brooks Air Force Base in San Antonio, Texas. OPHSA will have thirty seven active duty military, civil service, and contract employees and should be fully functional by the end of 1995.

This paper describes two experiences in systems modeling at the Idaho National Engineering Laboratory (INEL). These experiences reinforce key points that bear on the use of systems modeling in analyzing health-care issues. The first point is that mental models are a crucial part of systems. The second point is that simulation uncovers long-term consequences of existing assumptions.

Although using limited financial resources in the most beneficial way is, in principle, a laudable goal, actually developing standards for measuring the cost-effectiveness of medical technologies and incorporating them into the coverage process is a much more difficult proposition. Important methodological difficulties include determining how to compare a technology to its leading alternative, defining costs, incorporating patient preferences, and defining health outcomes. In addition, more practical questions must be addressed. These questions include: who does the analysis? who makes the decisions? which technologies to evaluate? what resources are required? what is the political and legal environment? how much is a health outcome worth? The ultimate question that must be answered is what is a health outcome worth? Cost-effectiveness analysis cannot answer this question; it only enables comparison of cost- effectiveness ratios across technologies. In order to determine whether a technology should be covered, society or individual insurers must determine how much they are willing to pay for the health benefits. Conducting cost-effectiveness analyses will not remove the need to make difficult resource allocation decisions; however, explicitly examining the tradeoffs involved in these decisions should help to improve the process.

This paper will focus on the potential conflicts between health care delivery and the control of health care costs. The recent and ongoing debate about the cost of health care has led many to believe that health care delivery must be sacrificed in the process of achieving control of health care costs. The goals of this paper are to examine the factors which provide improved health care to the general population, to briefly discuss the factors which increase health care costs, and then focus on policies, technologies, and procedures which have the potential to lower health care costs while improving quality of care.

Although medical technology appears to be the driving force behind the rate of increase of real national health expenditures, market imperfections are of greater concern. The market falls short of efficiently allocating health services because of perverse financial incentives and a lack of consumer and physician understanding of the value of many medical services. Making the best use of new and old technology requires better-informed health care decisions, which can help to counter the market imperfections.

There was a consensus among the panelists that innovative (state-of-the-art) technology is seen by many politicians as a major driving force in the escalation of health care costs. It was recommended that a basic premise of any policy should be to provide high quality care while being cost effective through the proper assessment and use of technology. Technology assessment should be used to reduce ineffectiveness by comparing the efficacy and effectiveness of an emerging technology, comparing the relative effectiveness of alternate technologies, and performing cost effectiveness analysis.

Policy should be directed toward increased scientific rigor in clinical trails, not rigor mortis of the review process. New technologies such as biomedical imaging can increase rigor by providing objective, quantitative measures of device efficacy. Furthermore, a variety of digital technologies for management of clinical trails data and for computerization of the regulatory submission and review process should also be encouraged. In sum, policy should encourage technologies that facilitate the clinical trails and regulatory review process, while increasing scientific rigor.

Today's remaining sessions are directed toward examining the health care decision-making process. The breakout that follows this plenary session will examine new medical missions for the national laboratories and Federal capabilities at system modelling. The general public is familiar with models in one form or another, but modelling in the engineering sense is not often well understood nor accepted by non-engineers. There are various reasons for modelling a system. The most prevalent reasons are: (1) to determine how a system works; and (2) to predict the system response (output or outcomes) to various external perturbations (stimuli) or to changes in system parameters. A good model of a system is essential to the analyses of many processes even though not all models render valid results. Most engineers are accustomed to the logical process of model development, verification, validation, and reiteration to improve the model's applicability and prediction capability.