Other issues:

• A fight between knife-wielding surgeons
  illustrates the pitfalls of putting all one’s eggs in a specific technology
  basket.
• Will people deny to their children the care they lavish on pets? If not, it is logical to
  expect public pressure to remove restrictions on human gene and stem-cell
  therapies.

From 1980 to late last year, the prevailing view was that the US had a
significant oversupply of physicians. The prevailing view has since done an
about turn, after two respected studies in 2002 projected deficits of 200,000
and 96,000 physicians, respectively, by the year 2020. “Admitting the problem is
the first step,” writes Jennifer Moody in HealthLeaders, and she calls
for action to end state budget cuts affecting graduate medical education
programs, build more medical schools, “rethink” the Clinical Skills Assessment
Test for foreign-trained physicians and lifting immigration barriers imposed
since 9/11, estimate medical staffing needs three to five years out and plan
accordingly, and provide incentives to retain existing medical staff and attract
new staff.

We are concerned that medical staffing projections may not adequately take
into consideration the impact of accelerating technological change on the
practice of medicine by 2020.* Consider, for example, the case of a just-opened
40-bed, doctor-owned, acute-care hospital in Texas. The US$34 million hospital
is making full use of technology to reduce operating costs, and expects to turn
a profit after four months of operation. Its $16 million-worth of technology
includes:

• Computer-controlled supply and medicine cabinets inside the operating rooms,
• A barcode-based computerized order entry system to eliminate medication
  errors,
• An electronic patient record accessible through plasma screens in every
  room, and
• An English and Spanish-“speaking” wheeled robot to deliver blood, medicine,
  and other supplies around the hospital — replacing 4.2 people over a 24-hour
  day.

All such technologies (especially the last item) need to be taken factored in
to long-range staffing estimates, if those estimates are to be reliable. The
Technology Workgroup of the Maryland Statewide Commission on the Crisis in
Nursing’s proposal to address the nursing shortage through technologies such as
robots for nursing homes, home monitoring systems, mobile communication devices,
CPOE, and EMRs is a step in the right direction. It recommends a survey to
assess technology use by Maryland nurses and follow-up forums for sharing
information on technology.

* See our brief article on the subject to appear
in an issue of Health &
Hospital Networks Online in April.

Reference: Kolenc, Vic (2004). “Eastsiders
get more options for health care.” El Paso Times, January 8.

Reference: Moody, Jennifer (2004). “The Physician
Shortage is Official: Now What?” HealthLeaders News, January 12.

Reference: Unknown (2004). “State Report Finds IT
Could Alleviate Nursing Shortage.” iHealthBeat, January 27, 2004.

Med Tech Costs and Drug Development

A recent study finds that the ratio of candidate drugs reaching “prehuman
testing” has fallen to one in 13, compared to one in eight in the period 1995 to
2000. That is partly, suggests Richard Rogoski in the Triangle Business
Journal, because pharmaceutical companies “are putting more drugs into their
pipelines — hoping to increase the chance of finding a blockbuster.” The
average cost of bringing a drug to market rose from $1.1 billion to US$1.7
billion, taking into account money spent on failed drugs and marketing. Another
study which did not factor in those expenditures calculated a cost of $802
million per successful drug.

Other factors behind the cost increase include:

• Genomics and proteomics breakthroughs, which require new and expensive drug
  discovery, development, and manufacturing technologies,
• Growing regulatory requirements and extension of clinical trials, and
• The use of expensive new technologies such as imaging to investigate a
  drug’s effects. (See “Brain Imaging” in the Diagnostics section for
  examples of imaging techniques likely to be required for testing future
  candidate Alzheimer’s drugs.)

Our view is that the accelerating commoditization of scanning and lab chip
technologies will soon, and significantly, reduce their costs. It will then be
up to the pharmaceutical industry to share the resulting cost savings with other
healthcare stakeholders.

Reference: Rogoski, Richard R. (2004). “Technology,
clinical trials drive up drug development costs.” Triangle Business Journal,
January 16.

“Creative” Hospital Financing

Some hospitals are using online auctions such as eBay to raise funds. They
include St. Jude Children’s Research Hospital in Memphis, Tennessee, which has
held two or three large online auctions each year for the past four years,
auctioning such things as celebrity autographs or a chance to meet someone
famous. Miami Children’s Hospital auctioned vacations, jewelry and art, raising
more than $32,000.

Reference: Vogt, Katherine (2004). “Hospitals see
cash in online auctions: A need for creative fund raising has facilities turning
to the Internet.” American Medical News, February 2.

Revised Reimbursement for Artificial
Skin

The US government’s Medicare program has increased reimbursement for
Apligraf artificial skin grafts from US$680 to $1,199 per treatment,
bringing its maker back from bankruptcy, at least for now. The new cancer drug
Velcade will be reimbursed at the government’s highest premium, 95
percent of average wholesale price, and increased reimbursement was also
obtained for Zevalin, a radiation therapy for non-Hodgkin’s lymphoma that
was struggling in the marketplace due to its high cost and low Medicare
reimbursement.

It’s not news that government reimbursement rates have an impact on medical
innovation, but it bears repeating.

Reference: Rowland, Christopher (2004).
“Once-ailing firm gets boost from Medicare: Higher Apligraf fee to aid
Organogenesis.” Boston Globe, January 7.

Med Tech Costs and the CyberKnife

The $4 million CyberKnife device delivers a beam of radiation with
pinpoint accuracy to destroy inoperable brain, lung, spinal and other tumors.
The older, rival Gamma Knife costs about the same but, according to at
least one expert, it is a “quantum leap” behind the CyberKnife in
efficacy, which leads one to surmise that the cost of the Gamma Knife
will have to come down substantially if it is to stay in the market.

However, one neurosurgeon who operates a Gamma Knife-equipped facility
told Miami Herald correspondent John Dorschner that a new (and, it seems
from the article, competitive) facility that has been formed around a
CyberKnife would result in “not the type of medicine that produces
quality outcomes. It’s the kind of medicine that a bunch of second-rate
physicians do after a half-day of training.”

The CyberKnife has a robot arm with two X-ray cameras and software
that calculates the exact position of the patient’s head, eliminating the need
for the head frame needed to keep a patient still during Gamma Knife
surgery. CyberKnife also eliminates the post-op overnight hospital stay needed
by Gamma Knife patients.

The new CyberKnife facility that so upsets the neurosurgeon quoted
above will train any neurologist to use the machine (training takes two and a
half days) so they can bring their patients there and treat them. Its
antagonist, who performs 400 Gamma Knife surgeries a year, suggests that
the doctors who use the new CyberKnife facility will likely do only a few
procedures each, and that their relative lack of experience “makes a huge
difference in outcomes.” Its proponents do not necessarily disagree, but point
out that the CyberKnife “does many things gamma knives can’t,” including,
apparently, treating tumors unreachable by Gamma Knife and tumors such as
benign facial tumors untreatable by Gamma Knife. CyberKnife is
also being developed to treat liver and prostate cancer and other diseases,
which would increase its cost-effectiveness. Medicare currently pays about
$25,000 to $30,000 both for CyberKnife and Gamma Knife
treatments.

Reference: Dorschner, John (2004). “Medical
technology: Zapping into the future.” Miami Herald, January 16.

Children vs. Pets

“America’s love affair with animals will slowly but inevitably undermine the
religious, moral, and ethical arguments” against human genetic and stem-cell
therapies, asserts Michael Schrage in Technology Review. He notes the
increasing spending on pets (US$19 billion annually now, versus $11 billion
seven years ago), the increasing specialization and sophistication of veterinary
medicine, the absence of regulations to limit embryonic-stem-cell research and
cloning in animals, pet-owners’ readiness to spend large sums on risky
procedures for an otherwise doomed animal, and that people are not likely to
deny their children the life-saving treatments they give their pets. It seems to
us a compelling argument.

Reference: Schrage, Michael (2004). “Medicine
Goes to the Dogs: Pampered pets provide loopholes for biomedical
entrepreneurs.” Technology Review, December 2003/January 2004.