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Chapter 8

Technological advancements have contributed to rising healthcare costs in the US due to factors like improved efficacy and lack of cost controls. Innovation is driven by professional prestige, satisfaction, and funding, and is undertaken mainly by firms with market power. Intellectual property rights like patents promote innovation by granting exclusive ownership rights. The US is a leader in commercializing biotechnological knowledge due to strong human capital, government support, patent protection, insurance coverage, and a system that encourages advanced technology use and diffusion. Economic incentives also promote adoption of new high-cost treatments.

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24 views8 pages

Chapter 8

Technological advancements have contributed to rising healthcare costs in the US due to factors like improved efficacy and lack of cost controls. Innovation is driven by professional prestige, satisfaction, and funding, and is undertaken mainly by firms with market power. Intellectual property rights like patents promote innovation by granting exclusive ownership rights. The US is a leader in commercializing biotechnological knowledge due to strong human capital, government support, patent protection, insurance coverage, and a system that encourages advanced technology use and diffusion. Economic incentives also promote adoption of new high-cost treatments.

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1 Healthcare Economics

 Technology transfer in health care

MSHA roll No 10 - Tanzela marriam


2 Technology Transfer in Heath care

 Technological advancements have significantly contributed to the rising costs of


healthcare,
 with the demand for sophisticated healthcare services increasing due to factors such as
improved efficacy, lack of cost controls in the US health insurance system, and concerns
over medical malpractice lawsuits.

MSHA roll No 10 - Tanzela marriam


3 Technological Change
Promotion of Innovation
 Innovation, driven by factors like professional prestige, satisfaction from curing
diseases, and government funding, plays a crucial role in technological progress.
 Innovation primarily undertaken by firms that have a good deal of market power, such as
those that are oligopolies or monopolistically competitive
 (Creative destruction)
 Cost contairnment policies have a dampening effect on rate of innovation in health
technology

MSHA roll No 10 - Tanzela marriam


4 Intellectual property rights

 Intellectual property rights, particularly patents, are essential in promoting innovation by


granting exclusive ownership rights for a specified period, incentivizing research and
development.
 The incentive to innovate would be reduced because duplication makes research and
development activity less profitable. The problem of imitation is particularly serious in
pharmaceutical industry where development cost is high as compere to production cost

MSHA roll No 10 - Tanzela marriam


5 U.S. firm’s ssuccessful innovation

 The United States has been a global leader in commercializing biotechnological


knowledge due to its
 strong human capital,
 government support for research,
 robust patent protection,
 generous insurance coverage, and
 a healthcare system that encourages the use of advanced technologies
 The US also excels in the diffusion of medical technologies, ranking highest in the
adoption of advanced procedures like magnetic resonance imaging (MRI) and radiation
therapy, which require substantial investments in infrastructure and specialized personnel.

MSHA roll No 10 - Tanzela marriam


6 Factors that promote technological diffusion

 Economic incentives, such as fee-for-service reimbursement systems, have been found


to promote the adoption of new high technology treatments.
 Fee for service and prospective payment system was found to be experiencing an
immediate rate of growth in the utilization of high technology treatments.

MSHA roll No 10 - Tanzela marriam


7 Cost increasing versus cost saving innovations

 Process innovations, such as the use of more expensive but efficacious new drugs, can
lead to significant cost savings in non-drug expenditures.
 Product innovation : Laparoscopic cholecystectomy surgery is an example of a cost-
increasing innovation that has become widely adopted due to its effectiveness in reducing
mortality rates and recovery time.
 The development of medical treatments may involve stages of initially higher costs
followed by lower costs, as seen in the case of polio treatments.

MSHA roll No 10 - Tanzela marriam


8 Productive efficiency

 Productive efficiency studies compare treatment methods based on the quantities of inputs
used to produce a given output.
 Capital capacity and technology comparison.
 The United States has been found to be more productively efficient than Germany and the
United Kingdom in the treatment of certain diseases, while the capacity of capital
equipment and technology allocation decisions impact productive efficiency across
countries.

MSHA roll No 10 - Tanzela marriam

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