One of the key drivers of the medical cost spiral in the U.S. is technology. But it’s also one of the brilliant aspects of our national and state economies, and one of the few positive line items in our balance of trade (exports minus imports). The U.S. is still a leader in med tech innovation. But how do we fund medical innovation as we aim to wring costs out of our system?

This week, medical technology is meeting in Washington DC for the annual AdvaMed conference to wrestle with the key issues challenging the industry. Costs and access to care are the over-arching concerns. Medicare is a focus, as clinicians and hospitals aren’t paid on the basis of health outcomes.

AdvaMed represents medical device manufacturers of every type — from “tongue depressors and band-aids” to robotic surgical technologies — inside the beltway and, as important, globally through work the advocacy group does with foreign countries in promoting global trade and open markets.

AdvaMed’s latest PR campaign is themed, “Progress you can see.” These print ads are meant to communicate the value of medical technology in our daily lives.

The value of medical innovation: this is the major theme of the meeting this year.

The U.S. is the world’s #1 producer of medical technology, producing more than half of the $175 billion in health care technology products purchased worldwide each year. And this sector generates a trade surplus: $62 billion over the last 10 years, and 6 percent annual growth.

Yesterday, a panel at the meeting discussed the value of medical technology — subtitled, “Innovation, Patients, Society.” The panel featured several of the most visible health economists and innovators on the scene.

“Society is really looking to your industry to help solve this cost problem,” Uwe Reinhardt, Princeton health economist, told the conference (Dr. Reinhardt also sits on the board of Boston Scientific, a device manufacturer).

While the impact on the trade surplus is positive, it is axiomatic that med tech plays a significant role in local economies in the U.S. A report released by The Lewin Group at the AdvaMed Meeting details the economic contributions of the sector at the state level. The report notes that in 2006, the med tech industry
employed 357,700 workers — and created an additional 4.5 jobs for every med tech job. Put another way, Lewin calculates, each dollar of medical technology sales generates another $0.90 in sales in that state.

States with the biggest med tech economies include California, Massachusetts, Florida, Minnesota, New Jersey and Pennsylvania. Furthermore, several smaller states have high concentrations of med tech jobs, such as Utah and Delaware, along with Nebraska, New Hampshire and South Dakota.

Health Populi’s Hot Points:
When used appropriately, the benefits of medical technology to us as individuals is a net positive. The value of medical technology goes beyond the individual — spillover effects to the community are significant in terms of employment and state economic development. And on a national level, med tech contributes to fiscal health. As we grapple with health reform models and cost containment, we must incorporate the value of med tech into the scenarios for reform.