Are the two biggest forces in American healthcare, health insurers and health systems, investing enough in research and development?
While the U.S. government and private companies are still big funders of health and medicine research and development, some new data suggests that the nation as a whole and some of its largest healthcare industries have not been devoting as much as they could to supporting improvements.
Total U.S. funding of medical and health services research increased at a rate of 6 percent annually between 1994 and 2004, but then the rate of growth declined to less than 1 percent per year, according to a study in the Journal of the American Medical Association. In fact, after 2010, not only has investment growth decelerated, but it has levelled off to $116 billion in 2012.
"New investment is required if the clinical value of past scientific discoveries and opportunities to improve care are to be fully realized," argue a team of researchers including Baltimore neurologist Hamilton Moses MD, and David Matheson, a senior advisor at the Boston Consulting Group.
"Given international trends," they argue, "the United States will relinquish its historical international lead in the next decade unless such measures are undertaken."
In 1994, the National Institutes of Health budget totaled $17.6 billion and a decade later it peaked at $35.6 billion in 2004 -- an era "of remarkable public sponsorship of medical research with growth exceeding 7 percent per year in the1990s," Moses and colleagues note.
After the mid-200s, funding from the NIH declined nearly 2 percent per year in real terms, representing a 13 percent decrease in NIH purchasing power overall. Pharmaceutical funding accounted for $20 billion in 1994, hit $38 billion in 2004 and then levelled off to $36 billion in 2012, although funding from smaller biotech firms has increased from $3.7 billion in 1994 to $19 billion in 2012.
Healthcare services research, which has traditionally received about 5 percent of total health science funding, has also seen a decline -- especially from the private sector sources who could benefit the most.
Among 22 industries, private insurers ranked last in their investment in research and innovation, contributing 0.04 percent of total revenue. Health systems ranked 19th, contributing 0.1 percent.
Both the public sector stagnation and the low private health services contributions in the U.S. diverge from other countries, "where government laboratories are predominant and where health systems and insurers conduct and finance service innovations directly," Moses and Matheson write.
The situation is complex, they note: "Hospital executives expect research to spawn new services, whereas pharmaceutical CEOs must have new products. An insurance executive doubts instinctively that the value of research will outweigh its incremental cost. A regulator aims for the appropriate amount of risk while still getting innovations that matter to the market."
But others think insurers and health systems could be devoting more to innovation, based on the revenue they generate and the stakes of America's enormous healthcare challenge -- to do more with less.
The median US industry invests about 2 percent of its revenue in research and development, notes health services researcher Bill Gardner at the Incidental Economist."Health system investment in service innovation is an order of magnitude less" than the multi-industry average and insurer investment is even lower.
"This lack of investment in their product is at variance with the images that health systems present as gleaming centers of research," Gardner argues. "Not investing in improving their products would be okay, I suppose, if US health systems were providing services that were safe, easily accessible, and affordable to everyone. But they aren't."
Insurers also have a lot riding on improving both the healthcare and health insurance experience. One opportunity they have is comparative effectiveness research, and indeed some companies like Anthem Blue Cross and Eli Lilly are taking small steps toward the goal.