Will New Medical Technologies  Blow Through Your Benefits Costs?

Will New Medical Technologies Blow Through Your Benefits Costs?

Take a sneak peek at some line items that might start appearing on the hospital bills of your employees.

You may not be feeling any pain right now, but that doesn’t mean something isn’t wrong. And I’m not talking about your gall bladder after the holidays; I’m talking about your employee health benefits costs. Specifically, how new medical technologies that health care providers are considering today may drive up your health care expenses tomorrow.

A sneak peek at some line items that might start showing up in your employees’ hospital bills was released in January, courtesy of the ECRI Foundation. Little known outside of the health care industry, the not-for-profit group based in Plymouth Meeting, Pa., researches the costs and benefits of new medical procedures, devices, drugs, processes and innovations, and provides its assessments to more than 5,000 clients, primarily hospitals, health systems, and public and private health insurers. Think of it as Consumer Reports for hospitals and health insurance companies that want to know whether to pay for new treatments as a covered benefit.

Each year, ECRI releases a top 10 list of medical technologies that hospital executives should have on their radar in the year ahead. Many of the items on ECRI’s annual list ultimately become standard practice at the nation’s hospitals. Virtually none of them come cheap, though all of them come with an implied promise of lowering health care costs through better and more efficient patient care services.

Last month, ECRI released its Top 10 Hospital C-Suite Watch List for 2014. (You can download the full 36-page report at bit.ly/K2iknT.) On the list this year are such big-ticket items as:

  • Computer-assisted personalized sedation systems that gastroenterologists or nurses (not anesthesiologists) can use to sedate patients undergoing colonoscopies.
  • Wearable powered exoskeleton rehabilitation devices that rehabilitation hospitals can use to give mobility to paraplegic patients.
  • NanoKnife electroporation systems that surgeons and oncologists can use to surgically remove some previously inoperable cancers.
  • And “smart” pills that include sensors that can track medication use, adherence and effectiveness.

All are in development, testing or limited use, and all may enter widespread use within several years with as-yet unknown prices. That may be good for patients, but someone has to pay for it, and that someone often ends up being employers.

Not everything on ECRI’s list this year is made of plastic, wire and lasers. Also making the 2014 roster is “big data,” which is shorthand for advanced data analytics that crunch myriad and seemingly unrelated data points into real-time, useful information. While common in other industries, big data is relatively new to health care, which has a lot of stats that no one yet knows what to do with.

Ideally, big data will lead to better and more efficient care, as it should identify medical practices that have the best outcomes at the lowest costs. But that savings, like everything, comes at a price. A report released late last year by research firm MarketsandMarkets predicted that big data will be big business in health care, topping $21 billion by 2020. (Access the report at prn.to/1cNJUvV.) Someone will have to pay hospitals and health insurers for deciphering their own data, and that someone may be employers.

On the same day that ECRI released its report on seeding medical technologies, the federal government released its latest annual report on overall health care spending trends. The report said national health care expenditures rose a modest 3.7 percent in 2012 to $2.8 trillion, continuing a string of modest increases that began in 2007. (Access the report at bit.ly/1acSzf5.) But expenditures on hospital care jumped 4.9 percent to $882.3 billion in 2012, and health care expenses incurred by private businesses climbed 4.7 percent in 2012, hitting $578.6 billion.

What links the ECRI report and the spending report for employers is a research paper released last fall by the Brookings Institution, the Washington, D.C.-based think tank. Three researchers broke down the causes of a recent slowing of the rate of health care costs and speculated on how those causes will affect health care costs in the future. The researchers predicted that spending increases will tick back up because of the “diffusion of new and very expensive technology with uncertain health benefits.” In other words, per the researchers, health care costs will creep up, absent a “fundamental change in how we pay for new cost-ineffective technologies.” (Access the research paper at bit.ly/1aEsiD7.)

The takeaway for employers is this: Enjoy the moderation in health care spending and corresponding moderation in employee benefits costs now, and if you want to enjoy them in the future, start asking your local health care providers now about the new medical technologies on their capital expenditure wish list. Ask them how much those technologies cost and how much more cost-effective patient care will be when those technologies come into full use.


David Burda (twitter.com/@davidrburda, dburda@msp-c.com) is editorial director, health care strategies, for MSP-C, where he serves as the chief health care content strategist and health care subject matter expert, and was editor of Modern Healthcare, the industry’s leading health care business publication.

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