Technology, medical equipment driving health care costs

The rising cost of health care has been a topic of intense national debate over the past two years, as legislators, health care experts and insurance companies ponder the reasons for the high cost of care and explore possible solutions.

Most studies addressing the reasons for rising health care costs put technology at the top of the list.

As Blue Cross Blue Shield of Michigan President and CEO Daniel J. Loepp pointed out at an employee meeting, “Everyone today wants the newest, the best equipment. And every new machine costs significantly more than the last. As a culture, we demand the newest and best.”

What he didn’t say, but implied, was that the newest, the best and the most expensive don’t necessarily correlate with better health care.

That’s a point that the Kaiser Family Foundation made in a background brief on health care costs. Here’s an excerpt:

Some analysts state that the availability of more expensive, state-of-the art technological services and new drugs fuel health care spending not only because the development costs of these products must be recouped by industry but also because they generate consumer demand for more intense, costly services even if they are not necessarily cost-effective.

In addition to the high cost of technology and prescription drugs, the online health policy resource cited the following factors as primary drivers of rising costs:

  • Greater prevalence of chronic disease
  • Aging of the population
  • Administrative costs

The background brief went on to include a number of ideas for controlling costs; among them, launching initiatives designed to improve quality and efficiency. It noted that higher spending on health care in certain geographical areas does not correspond to better health outcomes.

Improving health care quality and efficiency is exactly what Blue Cross Blue Shield of Michigan is doing through its Value Partnerships program. This joint collaboration among hospitals, physicians and the Blues is improving health care quality and outcomes, while lowering health care costs.

Key to the success of Value Partnerships is a series of quality initiatives and the industry-leading Patient-Centered Medical Home Program.  Learn more at and let us know what you think.

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