Impacts of Advances in Medical Technology in Australia

Advances in medical technology have brought large benefits to the Australian community. But they may also have driven around one-third of the growth in real health spending over the past decade, according to a report released by the Productivity Commission. These trends are set to continue, with future technological advances likely to support further dramatic improvements in healthcare, but also to raise expenditure significantly.

The report — Impacts of Advances in Medical Technology in Australia — responds to a request from the Australian Government to examine the impact of advances in medical technology on public and private healthcare expenditure, and the associated costs and benefits for the Australian community.

The Commission found that, in many cases, increased expenditure on new medical technologies reflected many more people being treated as well as better quality treatments. On the whole, it seems likely that the benefits of advances in medical technology have outweighed the additional costs. That said, the Commission found that the cost effectiveness of individual technologies varies widely and for some is not known.

“Likely future advances in medical technology will place significant pressures on both public and private health systems. Accelerating ageing of the population and income growth will also increase demand for healthcare. This potent mix underscores the need for more comprehensive and efficient health technology assessment processes”, said Commissioner Philip Weickhardt. “This highlights the need to explore what the community considers is an appropriate level of subsidised access to new technologies, and the institutional and incentive structures that will deliver it equitably and efficiently.”

The report highlights a number of procedural and coverage gaps in Australia’s health technology assessment processes. “There is scope for better coordinated, more systematic health technology assessment with transparent objectives, underpinned by the principle of enhancing overall community wellbeing”, said Commissioner Weickhardt. “Health technology assessment can enhance overall cost effectiveness of healthcare through better targeting of new technologies, especially compared with existing, often blunt, rationing mechanisms.”