Economics May Lead to Shift in Process of Innovation

Cost is becoming increasingly important in the assessment of new biomedical technologies in the current environment, and that is changing the way innovation is being taught to the next generation of inventors, Paul G. Yock, MD, of the Stanford University, Stanford, Calif., said in a featured lecture at TCT 2014.

mon.yock.head“There’s a historic shift going on in terms of where innovation is going to sit, and it’s going to sit in the value quadrant,” Yock said, noting that the textbook used in the Stanford Biodesign program — which he heads — has been rewritten to reflect the changing landscape. “[It’s] game over in terms of just inventing new technologies for patients [without addressing economics].”

Identifying areas of need

Still forming the basis of the innovation process is the identification of needs that require technological solutions. Before moving on to the final two steps — invention and implementation — it is crucial to select the most appropriate need, Yock said, adding that in the year-long program, participants spend the first 4 to 5 months in this phase. “If you get the clinical need right in med tech, you can be pretty much guaranteed of finding a solution,” he said.

The process has proven successful at breeding marketable ideas, with 33 companies having been launched out of the program, Yock said. But the environment for innovation is more challenging than it used to be, he said, shifting the focus toward designing new technologies while maximizing value.

Previously, the process taught at Stanford included a value discussion toward the end, during the implementation phase. Now, an exploration of value has become a more formal part of the needs identification phase.

Although necessary, the change has made the selection of areas ripe for innovation somewhat more difficult, Yock said. An earlier look at value has forced him and his colleagues to teach their fellows how to look beyond inefficiencies in practice to find fertile areas of opportunity to make more budget-based assessments. This includes exploring outliers in cost-effectiveness, big-ticket items in health care budgets, interventions in which the technology itself is a high percentage of the total cost, inefficiencies in episodes of care, conditions with high lifelong costs of care and interventions or episodes of care with wide geographic variation in cost.

In the United States, for example, the Medicare cost with the greatest variation from region to region is the expense of treating patients in the first 30 days after hospital discharge, meaning “that’s a great place to look for technology and system innovation,” Yock said.

Implications for innovation trainees

Because of the shift in focus to value, the next generation of innovators will require a basic understanding of health care economics and will have to be able to perform at least a rough prediction of the cost implications of any potential new technology, Yock said. Also, the finding of clinical needs will have to venture outside, as much as inside, of the hospital because costs accelerate when patients are admitted.

Solutions to the identified needs will increasingly rely on combinations of technologies with systems and processes, and on inventors who are skilled on both sides of the equation, Yock said.

And finally, U.S. inventors will have to look more to other countries to spur innovation. “Global health care settings are going to be a major way to uncover interesting needs and will be a fertile ground for affordable technologies that will translate back to the U.S.,” Yock said.

  

 Disclosures:

 

  • Yock reports no relevant conflicts of interest.

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