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Impacts of Advances in Medical Technology in Australia

Research report

The research report, Impacts of Advances in Medical Technology in Australia, was released on 20 September 2005.

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  • Key points
  • Media release
  • Contents

Advances in medical technology have brought large benefits but have also been a major driver of increased health spending in recent years.

  • In many cases, increased expenditure on new medical technologies reflects improved treatment and a significant increase in the number of people treated.

Overall, advances in medical technology arguably have provided value for money — particularly as people highly value improvements in the quality and length of life — but the cost effectiveness of individual technologies in practice varies widely and for some is simply unknown.

Variations in cost effectiveness, and relatively low use by some demographic groups, suggest scope for expanding use of some technologies and possibly reducing use of others to increase net community benefits.

Better coordinated, more systematic health technology assessment (HTA) with transparent objectives, underpinned by the principle of enhancing overall community wellbeing, would be a good step forward. HTA can help to target use of new technologies and promote overall cost effectiveness of healthcare spending.

  • Evidence and needs based access to new technologies is preferable to existing, often blunt, rationing mechanisms.
  • Systematic reviews of efficacy and cost effectiveness of new technologies once they are in use could promote overall cost effectiveness of healthcare, without unduly delaying their introduction.
  • Greater procedural transparency and community involvement in HTA have the potential to foster greater acceptance of technology funding decisions and to help ensure that HTA is not used simply to restrain expenditure.

The next decade or so could see the emergence of revolutionary technological advances based largely on knowledge of the human genome. Many are expected to provide significant benefits to the Australian community, but at significant cost.

Such technological advances, interacting with (and encouraged by) increasing demand for health services driven by income growth, accelerating population ageing, community expectations that new technologies will be accessible to all, the commitment of doctors to offer the best-available treatments, and subsidised consumer prices, will make for a potent mix, placing increasing pressures on the private and public health systems.

These pressures underscore the need for better information about the costs and benefits of technology. But technology is only one input in healthcare. Problems related to technology use often reflect broader structural, incentive and resourcing issues in the health system.

There is a pressing need to explore what the community considers is an appropriate level of subsidised access to healthcare and the technology it embodies, and the institutional and incentive structures that will deliver it efficiently and equitably.

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.'

Background information

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

Preliminaries
Cover, Copyright, Foreword, Terms of reference, Contents, Abbreviations and explanations, Glossary, Key Points, Overview

1 Introduction
1.1 About this study
1.2 Background to the study
1.3 Medical technology and the Australian healthcare system
1.4 Scope of the study
1.5 Conduct of the study
1.6 Report structure

2 The market for medical technology
2.1 Key demand drivers
2.2 Supply of medical technology
2.3 Conclusion

3 Aggregate impact of medical technology on expenditure
3.1 Techniques to measure the impact of technology
3.2 The residual approach
3.3 The direct approach

4 Individual technology expenditure impacts
4.1 Which technologies have driven the increase in healthcare expenditure?
4.2 Expenditure impacts of individual technologies
4.3 Funding responsibilities and expenditure on technology
4.4 Summing up

5 Benefits of advances in medical technology
5.1 Measuring outcomes
5.2 Health outcomes in Australia
5.3 Linking outcomes to advances in medical technology
5.4 Conclusions

6 Distribution of the benefits of new medical technology
6.1 Defining appropriate access
6.2 Measurement issues
6.3 Who has access to new medical technology
6.4 Explaining differences in utilisation rates
6.5 Conclusion

7 Cost effectiveness of advances in medical technology
7.1 Assessing aggregate net benefits of advances in medical technology
7.2 Cost-effectiveness analysis
7.3 Cost effectiveness of broad categories of technology
7.4 Cost effectiveness of individual technologies
7.5 Conclusion

8 Health technology assessment in Australia: an overview
8.1 Defining health technology assessment
8.2 Identifying gaps in HTA processes
8.3 Overview of HTA arrangements
8.4 Key gaps
8.5 Summary

9 Health technology assessment: pharmaceuticals
9.1 Assessment processes
9.2 Methodological issues
9.3 Procedural issues
9.4 Post-assessment processes

10 Health technology assessment: procedures, devices and ICT
10.1 Key differences in HTA between pharmaceuticals and other technologies
10.2 Medical procedures
10.3 Prostheses and devices
10.4 Information and communications technology
10.5 Post-assessment processes

11 Future advances in medical technology
11.1 Background
11.2 Technology development process
11.3 Projected disease burden
11.4 Likely advances in medical technology
11.5 Illustrative expenditure impacts of some future advances in medical technology
11.6 Conclusions

12 Conclusions and future policy challenges
12.1 Conclusions
12.2 Future policy challenges

APPENDICES

A Public consultation

B Measuring health and economic outcomes
B.1 A framework for economic evaluation
B.2 Single-dimension health outcome measures: data issues
B.3 Incorporating quality of life
B.4 Combining quality and quantity of life
B.5 Measuring and isolating economic benefits and costs: the issues
B.6 Other measurement issues

C Health technology assessment in other countries
C.1 Canada
C.2 Denmark
C.3 France
C.4 Sweden
C.5 The Netherlands
C.6 United Kingdom
C.7 United States
C.8 Concluding comments

D Case studies: an overview

E Joint replacement surgery
E.1 Introduction
E.2 Number of procedures
E.3 Expenditure
E.4 Benefits
E.5 Cost effectiveness
E.6 Future developments
E.7 Conclusion

F Statins
F.1 Introduction
F.2 Number of prescriptions
F.3 Expenditure
F.4 Benefits
F.5 Cost effectiveness
F.6 Future developments
F.7 Conclusion

G Selective Serotonin Reuptake Inhibitors
G.1 Introduction
G.2 Use and expenditure
G.3 Benefits
G.4 Cost effectiveness
G.5 Future developments
G.6 Conclusion

H Drug eluting stents
H.1 Introduction
H.2 Use
H.3 Expenditure
H.4 Benefits
H.5 Cost effectiveness
H.6 Future developments
H.7 Conclusion

I Trastuzumab (Herceptin)
I.1 Introduction
I.2 Need and use
I.3 Expenditure
I.4 Benefits
I.5 Cost effectiveness
I.6 Future developments
I.7 Conclusion

J PSA tests for prostate cancer
J.1 Introduction
J.2 PSA use and expenditure
J.3 Benefits of PSA testing
J.4 Cost effectiveness of PSA testing
J.5 Future developments
J.6 Conclusion

K Information and communications technology
K.1 ICT and health — the context
K.2 Health ICT in Australia — the big picture
K.3 Major ICT administrative and support initiatives
K.4 Potential benefits of ICT initiatives
K.5 Costs and cost effectiveness of ICT initiatives
K.6 Telehealth and telemedicine
K.7 ICT — concluding comments

L Genetic testing of women for breast cancer
L.1 Introduction
L.2 Need and use
L.3 Expenditure
L.4 Benefits
L.5 Cost effectiveness
L.6 Future
L.7 Conclusion

M Cataract surgery
M.1 Introduction
M.2 Cataract surgery — use and expenditure
M.3 Benefits
M.4 Cost effectiveness
M.5 Future developments
M.6 Conclusion

References