Reducing Health Care Costs

Technology and Cost Containment:

The ongoing increase in the costs of health care has become one of the major impediments towards increasing the accessibility and affordability of care services and enhancing patient outcomes.

Policymakers and various stakeholders in the health care industry have taken various measures to help lessen the costs of these services. One of the major initiatives undertaken by these stakeholders is the adoption of technology to address health care issues related to cost. Health information technology incorporates a wide range of technologies that are used to manage and share patient information electronically instead of the use of paper records (Takvorian, n.d.). Health information technology has been adopted because of its potential to enhance patient safety, improve the quality and efficiency of health care, and assist in restraining the rising costs.

Even though technology is considered as a major measure for lessening the escalating costs of health care, there have been several concerns on whether this initiative can actually achieve this goal. Some experts in this industry state that the development and diffusion of health information technology is one of the major factors for the constant difference between health expenditures and overall economic growth. In contrast, other experts argue that health information technology may contribute to nearly one-half or more of actual long-term spending growth. While new technology can either increase or lessen health care expenditures, health information technology generally contribute to the increase in the overall costs of care ("Snapshots," 2007). Generally, the ability of a new technology to increase or decrease health care costs is dependent on various factors including its impact on costs of treatment and the level of use it accomplishes.

An example of the recent initiatives taken by policymakers to facilitate the adoption of technology in health care is the enactment of HITECH Act. The Health Information Technology for Economic and Clinical Health (HITECH) provision was created to promote the meaningful use of health care information technology through various incentive programs for health care providers in response to the ever-increasing health care costs. The provision was enacted on the premise that significant cost savings can be achieved alongside other positive outcomes through improving data collection, enhancing transparency, and streamlining electronic medical records. Some of the major goals of the HITECH provision include promoting the adoption of certified electronic health records technology, enabling physicians to capture discrete data at the point of care, promoting countrywide electronic exchange of health information, and facilitating data reporting ("Summing Up HITECH Goals," n.d.).

While various initiatives have been adopted to lessen the costs of health care, policymakers and other stakeholders have experienced several challenges in achieving this goal. One of the significant challenges in lessening the rising costs of health care is the high costs of developing or producing new medical products. Generally, a huge portion of innovative products in medical markets are characterized by huge up-front costs of development and relatively less marginal costs of production (Jessup, 2012).

Policymakers have attempted to deal with this challenge through patents i.e. government protection that is geared to safeguard innovative products for some time. However, these measures have proven ineffective since they do not address the challenge effectively and continue to enhance health care costs. For instance, despite the use of patents, the cost of developing a new innovative medical product in 2006 was more than $1 billion. Policymakers envision that this challenge can be dealt with through the use of technology to develop medical products. Technology provides new means for developing medical products and significantly lessens the high up-front development costs. The discrepancies in these relatively high costs of development are attributed to the differences in the procedures used to create medical products. While some differences in development are not fully eliminated by the use of technology, it provides a standardized measure for production of innovative medical goods. These standardized measures help in lessening the costs of production, which in turn reduces the overall costs of health care.

These attempts by policymakers are successful in lessening the costs of health care because they result in development of substantial innovations that replace more costly technology and offer health improvements. The innovations help in lessening health care costs by reducing the costs of treating an individual patient. The innovations reduce treatment costs by improving treatment procedures and practices, creating faster patient recoveries, lessening medical errors, and reducing hospital stays.