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TECHNOLOGY ASSESSMENT IN MEDICINE: AN AUSTRALIAN PROPOSAL
Abstract
A large part of the increasing cost of health care services is often attributed to the introduction of new technology. While a review of the literature reveals that the evidence to support this view is ambiguous, it does indicate that the unregulated market fails to discriminate well between effective and ineffective health care technology. In some cases it has permitted the proliferation of medically harmful technology. At present Australia does not have a regulatory mechanism for ensuring the efficient use of new technology. The present paper suggests how such a mechanism could be established and the incentives that would be necessary to encourage the proliferation of only effective and efficient medical technology.
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NOTES AND REFERENCES
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There is also a Super Specialty Subcommittee of the Standing Committee of the Health Ministers’ Conference (SCOHM-SSS). Its terms of reference are narrowly defined as the investigation of “highly specialised services that cater for relatively rare diseases or provide unusually complex and costly forms of treatment [that must be] planned on a state wide or nation wide basis”.
D. M. Hailey, Health Care Technology Assessment, Medical Services Division, Commonwealth Department of Health, 1985, mimeo, p. 12.
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See Banta and Thacker, op. cit. Banta op. cit. also cites gastric freezing, the over use of x-rays and radical mastectomy as further examples where medical procedures have been harmful.
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In the economic model of the competitive market, there is a clear link between individual free choice in the market and the maximisation of individual welfare. In the absence of adequate information, this link is severed and the market will fail.
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The ‘human capital’ approach views an individual as the embodiment of future productive capacity. Life is valued by the value of future earnings. This approach is usually adopted in CBA since it is easy to quantify, but is not theoretically satisfactory. ‘Value’ is not always equal to productive capacity (unless ‘production’ is defined to ensure that the statement is tautologically true). One unsatisfactory implication of the approach is that women and children become less valued than men and the most cost beneficial policy with respect to the retired and elderly is to eliminate them! The second, and theoretically more satisfactory, alternative is the ‘willingness to pay’ approach. While this applies the same criterion of value to life as is applied elsewhere, it has proven to be very difficult to use in practical situations.
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J. Richardson, The Costs and Benefits of Extra Billing for Medical Care Services in Australia, Health Economics Research Unit, Australian National University, 1985, mimeo.
It is arguable that the proposal outlined here would result in excessive fees. Doctors with excess capacity (resulting from an oversupply of practitioners) would have a financial incentive to carry out procedures and obtain an average rate of return when they would otherwise obtain nothing.
Over a period of time wages are linked to an increase in average productivity, not simply through industrial tribunals, but by the need for businesses to pay competitive wages. When productivity is less than average, wages must still, ultimately, rise, thereby forcing up prices and causing a contraction of the (inefficient) industry. When productivity exceeds the average, wages do not rise excessively unless trade union pressure causes an undesirable distortion in the market. Rather, relative prices fall, the industry expands, and the benefits of the productivity growth are shared throughout the community. In the present case, the increased productivity of doctors would result in increased consumer benefits per dollar of health expenditure. It is not equitable for doctors to be exempted from contributing their share to increasing community benefits in the way described.
For a discussion of equity and efficiency in the determination of medical fees, see Richardson, op. cit.
Banta and Russell, op. cit.
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Blumenthal D.. 1983. . Federal policy towards health care technology: the case of the national centre. . Milbank Memorial Fund Quarterly . , Vol. 61((4)): 584––613. .