Meeting Summary

U.S. Summit II: December 3rd, 2004
Washington, DC
Global Medical Forum Foundation

What Is the Truth About the Cost and Utilization of Medical Technology in Europe vs. the U.S.?

Speech Title: Introduction to the Summit and an overview of the Global Medical Forum Foundation

Speakers
Prof. Raphael Levey; Chairman, Global Medical Forum Foundation
Robert Laszewski; Chairman North America, Global medical Forum Foundation

Speech Title: A German Payers View

Speaker
Ms. Anne Haas; Senior Officer for Health Policy, AOK Bundesverband (German National Insurer)

Moderator
Mr. Larry Leisure; Senior Vice-President, Kaiser Permanente

Panelists
Dr. Patrick Ryce; Senior Vice President and Medical Director, Blue Cross Blue Shield of Alabama
Dr. Wendy Everett; ScD, President, New England Healthcare Institute
Ms. Jill Berge ; Vice President Health and Welfare Plan Management and Design, Marriott International

Takeaways

• Ms. Haas provided the perspective of the largest social insurer in Germany providing coverage to 38% of the population.
• Technology was 11% of costs in 1998-compared to 7% in the U.S. during that year.
• Demographic (aging) increases in cost are a greater driver than technology in Germany.
• The challenge as seen is Germany is how to balance access to technology with the cost of that technology.
• Germany has a highly regulated framework for how to determine which technologies will be covered and how much will be paid for them.
• The key determinants in deciding what will be covered are: equitable access to the technology, appropriate use (on the basis of scientific standards), and efficient use. The process is based on HTA where a catalogue is decided upon for reimbursement by the SHI.
• Each of the key stakeholders (consumers, providers, etc.) has a say in the process.
• The process is cost/benefit driven.
• Only 20% of petitions to cover a technology are finally approved but there is the strong sense that the appropriate technologies are approved.
• There are no limits on the use of technology once it is approved-except for the overall budget the SHI physician or hospital might have.
• New technology tends to be additive-it does not tend to replace older technology that tends to remain in use.
• There is greater purchase of technology out-of-pocket-23% of patients bought an individual service up from 0% ten years ago.
• A Diagnostic Related Group (DRGs) payment system similar to that found in U.S. Medicare (since 1983) is to be implemented by 2009.
• Prices for medical technology are much lower in Germany than in the U.S.
• There is no transparency in prices within Germany-crutches cost more in Berlin than in Hamburg.
• Costs have begun to grow in Germany at rates that are challenging the system.
• There is a concern in Germany that the daily use and supply of services are not evidence based.
• There is very little data in Germany about outcomes and utilization-little qualitative data.
• AOK is interested in direct contracting with providers as one means to improve utilization and quality.
• In the end, Germany is struggling with many of the same issues as the U.S.-but doing it from a lower cost base (measured in per capita cost and percentage of GDP). However there are some fundamental structural differences: e.g. specialist to GP ratio 20/80 vs. 80/20.

Speech Title: The View of the Global Corporation Operating in the U.S. and Europe

Speaker
Dr. Jenifer Ehreth; Reimbursement Director, Medtronic Europe SA

Moderator
Dr. Catharina Maulbecker; Chair Europe, Global Medical Forum Foundation

Panelists
Mr. Martin “Chip” Doordan; President, Anne Arundel Health System
Dr. Murray Ross, Ph.D.; Director, Health Policy Analysis and Research, Kaiser Permanente Institute for Health Policy
Mr. Stephen Hull; Vice President Global Strategy & Analysis, Advanced Medical Technology Association (AdvaMed)

Takeaways

• Europe is 25 different markets and 25 different systems.
• "Living in Europe is like living in the middle of an experiment on healthcare financing."
• The biggest move in Europe is the trend toward the use of DRGs.
• The biggest lesson the U.S. can learn is the use of health technology assessment as a gatekeeper to implementation.
• The U.S. should not just look at a nation's whole system but at the aspects of each system's funding mechanism.
• Mechanisms that look at cost/benefit outcomes are the ones to follow.
• Private spending in the U.S. is the big driver that makes a difference when compared to the European systems.
• Both Europe and the U.S. accept the same definition of what is "good medicine"-share a science-based approach.
• The critical differences between the U.S. and Europe are around resources, need, and structure.
• In terms of resources, Europe is two-thirds as rich as the U.S (GDP per capita) and this has a major impact on what is spent.
• On need, Europe's population is materially older and this is placing pressure on the systems leading to political issues.
• Use of older technology is similar to that in the U.S. and is generally additive as well.
• The big difference between the U.S. and Europe is in getting access to new technology sooner.
• On structure, the European budgets are more constrained-private spending in the U.S. is far larger and creates a more liberal environment for the purchasing of medical technology.
• Patients are less involved in decision making in Europe and the medical malpractice system in the U.S. is a differentiating structural factor.
• A big part of the difference in Europe versus the U.S. is that the European systems ask whether the technology is cost effective before approving it while the U.S. affords relative unfettered access to new technology-particularly in the private market.
• Once a technology is approved, each country has their own price setting process
• Key Lessons:

• Europe has broader access for citizens, though often access to older technology, and slower adoption of the newest technology.
• If Europe were to lift its barriers Europeans would use far more technology.
• There is value to doing multiple evaluations of technology rather than relying upon only one source.

Speech Title: A European Provider's View

Speaker
Prof. Dr. Jorg Debatin, MD; Director, Universitaetsklink Hamburg Eppendorf (major German academic medical center)

Moderator
Ms. Jane Sarasohn-Kahn; Management Consultant and Health Economist, Representative of the Institute for the Future

Panelists
Mr. Martin “Chip” Doordan; President, Anne Arundel Health System
Dr. Patrick Ryce; Senior Vice President and Medical Director, Blue Cross Blue Shield of Alabama

Takeaways

• The German system of approval and reimbursement is complex.
• Reimbursement occurs more often in the in-patient setting-sometimes not paid for by the national sickness fund if in the ambulatory setting.
• Devices producing radiation tightly managed-no full body scanners in shopping centers in Germany.
• The approval process for new technology is slow.
• Much less equipment in Germany than in the U.S. Germany needs more but not as much as the U.S. has.
• Of 2000 hospitals, only 33 are medical centers with capability of handling more complex cases.
• 88% of patients come through the national sickness fund while 12% are private pay. Private pay systems reimburse 1.5 to 1.8 more than national fund.
• Any self-pay is outside the budget-and additional revenue to the provider.
• Hospital ambulatory care can only be served by self-pay or private insurance.
• 70% of hospitals are publicly owned or not-for-profit-30% of hospitals are corporate owned.
• The ambulatory physician is an entrepreneur-capitalizes his business and seeks to have expenses covered by various forms of revenue-government and private.
• Medical centers apply to have new technology paid for by the national system that includes a peer review process.
• General hospitals apply to state governments to capitalize technology costs through a political process.
• Ambulatory physicians buy technology without limit and pay for it through various revenue sources.
• System in transition to DRGs. This has led to a reduction of 30% in bed utilization in Dr. Debatin's hospital and a reduction of 25% in bed capacity.
• DRG pressures to increase efficiency leading to "one-step" diagnosis process in order to reduce costs of treatment.
• In January 2004, system introduced co-pays, which is slowing down utilization requiring greater hospital efficiency and increased focus on competitive attractiveness.
• Dr. Debatin's medical center is modernizing facilities with federal money in part to be able to better compete in evolving German system.
• Dr. Debatin gave a number of examples of how the system adapted to specific technology concluding that the system is relatively slow in adopting the latest technology.
• The increased competitiveness of the German system will require more price and quality transparency.
• A catalog of services and prices is available in Germany that informs patients of any private costs and enables the consumer to determine what the provider charges in relation to the standard price.

Speech Title: A British Policymaker's View

Speaker
Mr. Andrew Dillon; Chief Executive, National Institute for Clinical Excellence (NICE) (Chief British regulator for technology)

Moderator
Dr. Paul Ginsburg, Ph.D.; President, the Center for Studying Health System Change

Panelists
Dr. Sean Tunis , MD, MSc.; Chief Medical Officer, and Director, Office of Clinical Standards and Quality, Center for Medicare and Medicaid Services, US Department of Health and Human Services
Dr. Murray Ross, Ph.D.; Director, Health Policy Analysis and Research, Kaiser Permanente Institute for Health Policy
Ms. Jill Berger; Vice President, Health and Welfare Plan Management and Design, Marriott International
Mr. Thomas Grissom; Vice President Government Affairs, Boston Scientific Corporation

Takeaways

• Plan is to get the UK closer to the European average of share of GDP being spent on health care.
• The UK has been a slow investor in technologies.
• Focus in UK is on benefit, risk, and specific benefits for selected patients.
• This perspective differs from a perspective that might implement technology if there is any benefit-no matter how small. "Effective but not worth the cost"
• It is important that patients and providers have a shared understanding of what the optimal use of a technology is-not just marginal use.
• Machines and devices can be sold in the UK for whatever the market will bear.
• UK health decisions are largely taken at local levels but some decisions are taken at the national level-NICE approves new technology at the national level.
• Mr. Dillon outlines three case studies-see slides and video.
• NICE constructs a comprehensive cost /benefit analysis.
• The process is highly effective but time consuming.
• NICE manages the entry of health technologies into the market as well as the exit of old technologies.
• Each new technology involves an increase in expenditure.
• Each increase in new technology is intended to have clearly defined benefits-or the expectation of a benefit.
• Risks and benefits of a new technology are identified-and risks shared when uncertainty exists.
• Benefits are targeted for specific groups-not assumed benefits apply to all patients.

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