The term technology assessment (TA) originated a generation ago in 1965 in the U.S. House of Representatives during deliberations of the Committee on Science and Astronautics. Studies done by the National Academy of Sciences and other agencies led to the establishment of the congressional Office of Technology Assessment (OTA), which became operational in 1974 and established its health program in 1975.
The healthcare industry had been among the pioneers of technology assessment, even before the term was invented, and healthcare technology was one of the early subjects of TA’s in general.
While health technology assessment used to be the domain of government agencies and policy makers, it is now the business of healthcare professionals at every level. Today, technology assessment is an international business that concerns governments and individual healthcare facilities alike.
Cost and the tech assessment basics
“As technology advances, the price tag goes up,” says Wayne Coffman, medical equipment planner/project manager of Hospital Affiliates Development Corp. (HADC), a private consulting firm that builds, renovates, and equips healthcare facilities. “With the recent Balanced Budget Act, hospitals are [further] looking to justify costs before purchasing expensive new equipment.”
“It is very obvious that hospitals are coming under increased cost pressure,” says Chip Halverson, president of MedAssets Exchange in Wood Dale, Ill. “Budgets for capital are being reduced across the board — the last frontier is what to do with capital. If there is a new, compelling technology, a business case has to be made for its acquisition.”
In addition to the Balanced Budget Act, the recent Y2K expenditures and HIPAA legislation also are impacting heavily on healthcare budgets.
“The tighter the dollar, the more important it is to have the best value —clinical, financial, and technical,” says Tony Montagnolo, vice president of technology planning for ECRI, a nonprofit technology assessment research and consulting organization.
“Some people would like to define technology assessment as technology procurement,” says Montagnolo. “But the two are very different.”
According to Montagnolo, the first step in tech assessment is to ask the question of whether or not the technology is needed. Only after this has been answered positively should one consider which piece of equipment to buy.
“A lifecycle cost analysis is one factor to consider,” Montagnolo says. “This will help determine if there is long-term value. But people often miss the ongoing costs of ownership and use. This includes the cost of maintenance, supplies and reagents.”
For example, PACS technology may reduce film costs, but printing costs will increase. And the hospital’s network may not be capable of handling the huge information requirements of electronic imaging systems, which could result in other costs and problems.
Unintended consequences are another factor to consider. For example, while the price per exam may go down with a new piece of technology, the technology might actually increase overall costs by making the procedure more convenient so that it is done more often.
“New technology can reduce costs,” Montagnolo says. “But it depends on the technology and how you count.”
He advises hospitals to move away from emergency acquisitions and move towards a rational process that considers both clinical and economic returns on investment. “Make sure you evaluate the need for the technology, not in a vacuum, but in an overall scheme for what is best for the organization,” he says.
Case in point
ECRI was involved with Christiana Care Health Care Systems of Wilmington, Del., in helping the hospital system to understand technology assessment and the process of evaluation. During the first year, ECRI did a technology assessment of all major departments. Since then, the hospital has learned how to do technology assessment in-house and has had an effective system in place for more than seven years now.
“We have a longstanding technology management committee consisting of five physicians and five administrators,” says Ray Seigfried, senior vice president.
Seigfried stresses that technology is a shared responsibility between administration and the physician community, and this cooperation is what has made his committee effective.
Using this model, Christiana Care Health Care Systems has developed a system that compliments the capital budget process with an actual technology review of major clinical equipment requests.
The review process considers three major components: clinical criteria, compatibility with the hospital’s strategic plan, and a financial review. Based upon these criteria, each technology request is given a score, as well as an overall score of the technology type. The list is then prioritized as being of high, medium, or low, and recommendations are made based upon these factors.
“We have just completed our fiscal review for 2001, which has gone through 42 devices and $14 million worth of requests,” Seigfried says.
Requests are presented to the committee by department heads or chairpersons. To maintain objectivity, vendors do not appear before the committee. The financial review takes into account a number of factors, including the effect the new technology might have on other sections of the hospital. Costs of maintenance, supplies, and system integration are taken into account, as well as the lifecycle analysis of the technology itself.
Should a new piece of technology emerge, the committee can do an immediate review anytime throughout the year. If approved, the new technology would seek a contingency fund and Board approval for the purchase.
More hospital business people are now involved in technology assessment than there used to be, observes MedAssets Halverson.
“You see people from finance, the chief operating officer’s group, and the materials [management] people now serving on capital committees and technology committees. They are asking if there is a good business reason for the purchase.”
The business and technology people work together to make the final decision. The technical people survey the market and research what is available, not just now but in six months to a year.
“Sometimes, if you buy now you are at the end of a product lifecycle,” Halverson says. “If you wait six months, you can get better technology at the beginning of its lifecycle for the same price.”
MedAssets Exchange specializes in helping hospitals consider refurbished equipment and the redeployment of equipment as part of their technology assessment program.
Halverson sees a new paradigm in healthcare today, one where hospitals have merged resources rather than compete against one another. Now, instead of each hospital in a given area needing the latest new technology, affiliated hospitals can specialize and share resources.
“They can have different levels of technology in different places,” Halverson says, “and can refer patients to the appropriate technology.”
The central teaching hospital, for example, can upgrade to the most current CT technology, while the older CT units are moved into the suburban units of the hospital. This offers opportunities for redeployment of older technology.
“In the past, older units were often either put in storage or traded in for nominal value,” says Halverson. “MedAssets will offer to buy this equipment for market value, or refurbish it and add a digital upgrade, for example, so it can be redeployed to an affiliate hospital.”
Vendor neutral
Philips Healthcare Consulting, a division of Philips Electronics (Shelton, Conn.), offers technology assessment consulting services as part of its heathcare division. While Philips also is an equipment manufacturer, the consulting group has worked very hard to be vendor-neutral, according to Henry Soch, executive director of Philips Healthcare Consulting.
“There is always the issue of objectivity that comes into question,” Soch admits. “However, our consulting division is a separate business unit from the manufacturer — it’s an arms-length kind of relationship.”
In order to ensure this objectivity, Philips first executes a nondisclosure procedure that prohibits giving client information to any manufacturer — even Philips itself. They also pride themselves on providing accurate, objective information to their clients.
“We use databases purchased from the outside,” Soch says. “Data is taken from published literature and the citations are shared with our clients.”
Philips Healthcare Consulting offers a number of services to hospitals that need technology assessment. “Snapshot,” their primary assessment offering, provides an evaluation of the client’s current situation. It gives a quick overview of department and hospital practices and draws comparisons with best practices in the region, the United States, and the world.
“Our clients ask us to look at utilization of the equipment and we calculate an efficiency index that tells them how they stack up to national averages,” Soch says.
This data can be especially useful when a hospital is thinking about expanding. The analysis will show if the current technology is being used to its maximum capacity or not, and will help answer the question of whether expansion is really necessary.
“It is important to understand your market conditions,” says Soch. “This includes examining the population base, other providers in the area, referral patterns that you have set up, and your capacity to adjust your delivery service for the convenience and access for patients.”
Philips also assists clients with the acquisition of new technology by developing business case models as decision-support tools to help them build a business plan to support the technology purchase. This takes into account the lifecycle cost analysis of the equipment, as well as cost of space, film, materials, maintenance, and other factors. General reimbursement trends are another factor to be considered, since not all payers will reimburse for all new technology. If the reimbursement is not available, the client should know if there is a plan in place for obtaining reimbursement in the future.
Hospital Affiliates’ Coffman admits that vendors have become very reliable when it comes to tech assessment. “In the past there were questions, but now they are pretty honest,” he says. Still, he strongly recommends that a third party be involved in assessment.
Hospital Affiliates specializes in the building of new facilities, and in expansion and renovation, and Coffman’s specialty is in using technology assessment as part of this process. He is often called in to perform market assessments to determine if the demographics of a population will support the purchase of a certain piece of medical imaging equipment.
“First, we look at the overall strategic plan of the facility,” Coffman says. “What modalities do they use, what type of physicians do they have on staff, and what technology is already present. We generally want to stay in the same technology line.”
Hospital Affiliates also surveys physician preference, numbers and types of patients, types of diseases treated, and overall demographics. Then they make three to five year projections to help with their recommendations.
“You have to have some type of forward-looking vision,” says Coffman. “If you don’t get into a technology line that’s upgradeable, for example, you are limited in the future.”
Learning more
Healthcare technology assessment is a complex subject, and a number of educational resources are available for those who wish to learn more.
“Health Technology Assessment on the Net” is a distance learning project jointly funded by the British Columbia Health Research Foundation and the University of Victoria School of Health Information Science. This noncredit course is taught through the Internet and covers the basics of practical technology assessment in the current healthcare system environment. The course units include the language of technology assessment from basics to advanced concepts, stages in the technology lifecycle, and practical issues of health service study rigor and validity. The basic course fee is $470 (Canadian). More information can be found at http://hta.uvic.ca/home.html and students can register on-line at the Web site.
Philips Healthcare Consulting also offers noncredit courses through its new Online Learning Center. While they don’t offer a course in TA per se, they do offer a course in Activity Based Costing, which uses a common chest X-ray to explain the concepts. Another course, Financial Management for Health Care Managers, might also prove helpful. More information can be found at http://learn.phcna.com.
Finally, for those who want to see the world while learning about TA, the 16th Annual Meeting of the International Society of Technology Assessment in Health Care will take place in The Hague, Holland, in June. See http://www.nivel.nl/istahc.htm for more information. 
