WASHINGTON - Medical technology is certainly praised for its scientific advancement, but it is also the target of blame for rising health care costs.

A newly updated study from a leading industry association shows that medical technology represents only a small fraction of health spending and that costs are not escalating as feared.

The study, just released by the Advanced Medical Technology Association (AdvaMed) and leading health accountants, found that medical technology is a small and slowly growing part of national health expenditures (NHE).
The report found that in 2006, medical device spending totaled $131.6 billion or 6.2 percent of total national health expenditures ($2,112.7 billion) and that during the 18-year period covered by the study (1989-2006), medical device spending rose only slightly as a percent of NHE-growing from 5.4 percent in 1989 to 6.2 percent in 2006- a 0.8 percentage point increase over the 18-year period.

"It is striking that the direct cost of medical devices and diagnostics, which are so central to medical practice and which have been the source of so much medical innovation, account for a relatively low and slowly growing share of overall national health expenditures," said Stephen J. Ubl, President and CEO of AdvaMed.

The report finds that medical device price changes have been consistently low during the 18 years examined. Medical device prices have increased at an average annual rate of 1.1 percent, compared to the Consumer Price Index increase of 2.9 percent, the Medical Consumer Price Index increase of 4.9 percent, and the Medical Services Consumer Price Index Increase of 5.2 percent.

While medical device spending has grown slightly faster than national health expenditures overall, prices for medical devices have actually grown far more slowly than the Medical Consumer Price Index or even the overall Consumer Price Index.

"This relatively slow rate of price increase is consistent with the findings from our earlier report and is due, in large part, to the highly competitive nature of the medical technology industry," said King.

As the report concludes, "During much of the eighteen year period, 1989--2006, a significant driver of changed medical practice has been the development of new medical devices-from stents to implantable defibrillators to artificial hips and knees to new imaging modalities to new diagnostic tests to new surgical tools. In view of the conventional wisdom about the role of medical technology in driving up costs, it is surprising that the cost of medical devices has risen little as a share of total national health expenditures. It is also striking that, unlike most other areas of medicine, the prices of medical devices have actually been growing more slowly not only than the MCPI but than the CPI as a whole."

Access the report on AdvaMed's Web site:
http://www.advamed.org/NR/rdonlyres/CD6F0302-FCEB-46D7-A9DC-AF12DC9FEE3D/0/King2009FINALREPORT.pdf

In releasing the recently updated study, the Advanced Medical Technology Association was joined by a leading health actuary, Roland "Guy" King, and an expert on economic accounting, Gerald Donahoe.

About AdvaMed
AdvaMed member companies produce the medical devices, diagnostic products and health information systems that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. Our members produce nearly 90 percent of the health care technology purchased annually in the United States and more than 50 percent purchased annually around the world. AdvaMed members range from the largest to the smallest medical technology innovators and companies. For more information, visit http://www.advamed.org/.

Source: AdvaMed

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