Cost of medical technology only small part of national health costs
and rising slowly
8 June 2009
A US study
of the costs of medical technology has reported that it is a small and slow growing part of
national health expenditure (NHE).
The report by the Advanced Medical Technology Association (AdvaMed) found that in 2006, medical device spending
in the US totalled US$131.6
billion or 6.2% of total national health expenditures (US$2,112.7
billion). During the 18-year period covered by the study
(1989-2006), medical device spending rose only slightly as a percentage
of national health expenditure — growing from 5.4% in 1989 to 6.2% in 2006 — a 0.8
pecentage 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%, compared to the
Consumer Price Index increase of 2.9%, the Medical Consumer Price
Index increase of 4.9%, and the Medical Services Consumer Price
Index Increase of 5.2%.
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
John Wilkinson, Chief Executive of Eucomed, the European medical
technology association, commented on the findings: “Without the medical
technology industry the cost of delivering healthcare today would be
substantially higher than it currently is.
"The challenge for the European sector is to prove it and demonstrate
the error in conventional thinking. That’s why Eucomed founded the
European Health Technology Institute for Socio-Economic Research (ETHI)
to research how these medical technology innovations impact the economy
and welfare of European countries.
"Our sector is committed to support strained healthcare systems where
the real drivers of cost inflation are of a demographic nature and the
consequence of increased expectations by citizens for higher quality of
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.”
Download the report as a PDF file from AdvaMed’s website.
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