Stop Griping About Medical Device Price Increases, Study Says

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Michael Causey, Editor & Publisher,

Gasoline prices have been spiking, Netflix has ticked off many of us with big increases, but medical technology has been a relatively good deal for consumers over the past twenty years, says a new study from the Advanced Medical Technology Association (AdvaMed).

Its findings: Device and diagnostic prices have increased at an average annual rate of 1.0 percent, compared to the Consumer Price Index (CPI) increase of 2.8 percent, the Medical Care CPI increase of 4.7 percent and the Medical Care Services CPI increase of 5.0 percent.


Source: AdvaMed


The research, funded by AdvaMed, was conducted by Roland “Guy” King, a leading health actuary, and Gerald Donahoe, an expert on economic accounting. The study found that spending on advanced medical technology over the past 21 years has risen only slightly as percentage of overall national health spending, demonstrating “remarkable consistency and value during a period of tremendous medical progress,” AdvaMed said in a release touting the study.

Medical device spending has gone from just 5.3 percent of national health expenditures (NHE) in 1989 to 5.9 percent in 2009. The percentage has remained virtually constant since 1992 at about 6 percent of NHE.

“The highly price competitive nature of the industry also is striking. Unlike most other areas of medicine, the prices of medical devices have actually been growing more slowly not only as compared to the MCPI but also as compared to the CPI as a whole,” said Ann-Marie Lynch, AdvaMed’s executive vice president, payment and health care delivery policy.

As the report concludes, “During much of the period of this study, 1989-2009, a significant driver of changed medical practice has been the development of new medical devices … In view of the conventional wisdom about the role of medical technology in driving up costs, it is surprising that the cost of medical devices during this period has risen little as a share of total national health expenditures and, since 1992, has remained essentially constant as a percent of national health expenditures.”

From 1978 to 1995, King served as the chief actuary for the Health Care Finance Administration, the precursor for the Centers for Medicare and Medicaid Services. Donahoe worked for the U.S. Department of Commerce Bureau of Economic Analysis for 26 years and held the position of associate director for national economic accounts.



  • Reply

    This is something most of us in the medical device industry knew in the back of our minds but its good to see it has actually been studied. It would be nice to see this published in Modern Healthcare, Hospital Purchasing News and others that those in a decision-making and/or procurement role could see. I don’t get a sense that they understand what this study shows.

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