New Research Shows No Uniform Relationship between Technological Innovation and Increasing Healthcare Expenditure

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Healthcare spending is increasing more rapidly than incomes in the majority of developed countries [1], and use of medical technology is steadily escalating alongside. Between 2000 and 2011, Organisation for Economic Co-operation and Development (OECD) Health data reveals an average annual growth rate of 4.0% for total healthcare expenditure (ranging from 1.5% in Luxembourg to 9.3% in Korea) [2]. Spending in OECD member countries rose to 9.5% of gross domestic product in 2009 from 8.8% just a year earlier [3]. Meanwhile, medical technologies are progressing in not only number, but in efficacy and sophistication [3]. It may be a safe assumption to attribute the increasing spending to technological innovation. A quick search yields articles and media buzz emphasising this relationship, but it’s not necessarily as simple as that. The European Health Technology Institute (EHTI) reviewed 86 studies to examine this correlation and found the impact of novel technologies on healthcare expenditure to be complex and variable, and to differ across technologies.

Sorenson et al. found that new technology is an important contributor to cost increases, but it’s not the straightforward or static relationship it’s often claimed to be [3]. They illustrate several factors that determine whether a particular technology will increase or decrease expenditure, including whether it: replaces an existing procedure; increases the number of treatable conditions by allowing healthcare practitioners to effectively treat conditions that couldn’t previously be treated; increases the amount the technology is used for a specific condition; allows treatment of a greater number of patients; expands the definition of a disease; or extends life, therefore, increasing years of healthcare consumption for those individuals [3].

Take imaging diagnostics, such as x-rays and magnetic resonance, for example: at first use, these technologies were applied to specific organs, but they are now used on most systems of the body, which has of course increased overall expenditure, as well as quality of care [3]. On the other hand, the researchers describe some technologies as having a ’substitutive effect’, reducing costs over time by replacing current, more expensive treatments. For example, the cost of using percutaneous transluminal coronary angioplasty (PTCA) has been offset by increasing use of coronary artery bypass grafting (CABG) in its place [3].

EHTI’s research also shows that the impact of novel technology on healthcare expenditure depends on the circumstances in which it is applied, such as the patient population [3]. For example, use of drug-eluting stents increased healthcare expenditure per patient when compared with balloon angioplasty, but when used in medium- or high-risk patients, no change in cost or cost-savings were observed [3]. Furthermore, other organisational, social and economic considerations also determine the impact of a particular technology on healthcare expenditure. In terms of organisational factors, some technologies reduce procedure time and length of hospital stay; however, they can, in some cases, also allow for treatment of additional patients, thereby increasing healthcare expenditure. However, this increase will likely result in improved health outcomes for a larger number of patients and, in this context, may be cost-effective [3].

EHTI’s review confirms that medical technologies play a significant, but complex, role in the overall increase in healthcare expenditure. They state that a clear measurement of these dynamics remains out of reach considering the complexity of the issue and the methodological limitations that make this analysis a challenge. They argue that examining healthcare expenditure increases based on technological innovation is an important area of research, but that it’s largely an ‘incomplete exercise’, given that most new technologies increase costs, but also provide even greater benefits that must be taken into account [3]. Finally, the researchers at EHTI emphasise that more comparative research is needed to understand which technologies will provide the most benefit and offer the most cost savings, and that in order for these findings to have any impact on healthcare expenditures, they must be considered when developing healthcare policy and practice [3].


  1. Henry J. Kaiser Family Foundation. Snapshots: Health Care Spending in the United States & Selected OECD Countries, 2011. Available from: Accessed September 2013
  2. OECD Better Policies for Better Lives. OECD Health Data 2013 – Frequently Requested Data, 2013. Available from: Accessed September 2013
  3. Sorenson, C et al. Clinicoecon Outcomes Res 2013; 5: 223–234


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One Response to: New Research Shows No Uniform Relationship between...

  1. ShanidaN ShanidaN says:

    It is worthwhile noting that Sorenson et al. highlight two limitations of their analysis. The first is that, for some of the studies included in the analysis, the technology examined included both pharmaceutical drugs and medical devices, and therefore, for these studies, it is difficult to make firm conclusions over the relative contribution of these two types of technology on spending. The second is that their review focused on cardiology and orthopaedic devices, and did not specifically include devices used exclusively in the intensive care and perioperative setting; however, the authors argue that these sectors are most likely to have an impact on overall healthcare spending.

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