Impact of Advances in Medical Technology on Health Care Costs

Term Paper, 2012

15 Pages, Grade: 98


Table of Contents



Literature Review

Case Studies
Case Study 1
Case Study 2

Discussion and Future Directions




Health care costs in the United States continue to rise at alarming rates. As many citizens, politicians, physicians, government policy makers and others speculate as to the causes, some have theorized and studied the impact advances in medical technology have had on the rising costs. Findings are mixed across different articles but case studies by two experts provide some compelling evidence on this theory. One case study shows how medical technology can be part of a sometimes extended and wasteful treatment plan for patients, while the other shows how advanced medical technology can actually reduce treatment costs by preventing unnecessary and costly procedures.

Another facet to explore in any topic such as rising health care costs, where it is so widely discussed and debated by average people, is the public perception of medical technology and its role in this. This is also presented in this paper with a brief overview of a survey conducted by Harvard University in conjunction with other organizations.

First, facts about rising health care costs are briefly presented along with an overview of some of the major advances in medical technology to provide background information. A majority of the paper is devoted to the literature selected for relevance and case studies taken from presentations by experts in related fields. Selected literature is reviewed with summaries of the authors’ relevant contributions to the topic highlighted and the chosen case studies are described in detail. Lastly, there is a brief discussion of some of the observed findings in the literature reviewed and opinions for directions for future explorations of this topic are given.


According to the National Coalition on Health Care (2007), the United States as a nation spent $2 Trillion in 2005 on health care alone, which represented a 6.9% increase over the previous year. That rate is two times the rate of inflation and that amount is 16% of the nation’s Gross Domestic Product (GDP). Comparatively, health care accounts for 9.7% of GDP in Canada, 9.5% in France and 10.7% in Germany.

Health insurance premiums for both employers and employees are also on the rise. In 2006, larger employers saw an increase of 7.7% in their health insurance premiums, smaller firms averaged 8.8%, and the smallest (less than 24 employees) had their premiums increase by 10.5%. Finally, while wages between 2000 and 2006 increased by approximately 20%, employment-based health insurance premiums increased by 87% during the same time period. American workers, on average paid $1,094 per year more for family coverage in 2006 than they did in 2000. Also since 2000, the average employee contribution to their employer’s health insurance program has increased by over 143% between 2000 and 2006 (National Coalition on Health Care, 2007).

illustration not visible in this excerpt

Source: Controlling Health care Costs (Gilbertson, 2005).

Figure 1 (above) shows the changes in health insurance premiums between 1988 and 2004 compared to other indicators such as overall inflation and workers’ earnings (Gilbertson, 2005).

Over the past two-hundred and fifty years mankind has made enormous advances in medical technology. From the advent of vaccinations and antibiotics, to the discovery of x-ray technology and the perfecting of heart transplant surgery, the discoveries and advancements vary widely. A brief overview of some of those major advances is presented in Figure 2.

Figure 2

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Sources: Timeline of Medical Breakthroughs (Olund, 2008), Dec. 24, 1936: Radiation Used to Treat Disease for the First Time (Long, 2007), Who discovered chemotheraphy (Cancer Research UK Charity, 2007) and Stages of Medicine (Regio, n.d.)

Some of these technological advances shown in Figure 2 are identified in the literature reviewed and case studies discussed later in this paper.

Literature Review

Annamarie Barros, M.A. (1995) among many things, is a laboratory operations adviser for Ernst & Young’s north central region of the United States. In an article Barros wrote for the Medical Laboratory Observer she discusses laboratories across the US that she has observed stuck in wastefull practices with no regard for costs. That disregard translates into higher prices charged patients and hospitals for laboratory work. However Barros identified obsolete equipment in laboatories as one of the most common ways for waste to occur. Believing older equipment is more reliable, still functioning sufficiently and less costly then replacing it with newer technology, these laboratories waste time for patient care and money in terms of the direct and indirect costs they fail to notice associated with the outdated equipment. She also identified other sources of waste. For example, the misuse of skills when laboratories under utilize technicians and have actual scientists performing technician functions and a lack of focus on an “effective patient outcome” which she describes as laboratories doing things correct the first time, and insisting on only relevant laboratory work with the best interests of the actual patient in mind for turn around time, costs and more (Barros, 1995).


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Impact of Advances in Medical Technology on Health Care Costs
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Ed Malo (Author), 2012, Impact of Advances in Medical Technology on Health Care Costs, Munich, GRIN Verlag,


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