Describe the difference between cost-saving and cost-increasing technology-based innovations in reference to health care policy economics. Provide an example of each and analyze why a cost-increasing innovation would continue to be used.

 

Answer:

The contrasting difference between the cost-saving technology-based innovation and the cost-increasing technology-based innovations in the context of healthcare policy economics is that cost-saving technology-based innovation is the one-time investment whereas cost-increasing technology-based innovations lead to increase in health care cost. 

The example of cost-saving technology-based innovation is an installation of advanced diagnostic equipment at the hospital. 

The example of cost-increasing technology-based innovations is the money charged by the hospital from their patients. 

The use of cost-increasing technology-based innovation will continue because of the increase in demand with the growth of the healthcare organization.

Step-by-step explanation

The difference between cost-saving technology-based innovation and the cost-increasing technology-based innovations in the context of healthcare policy economics (between the healthcare providers and healthcare service consumers) is that cost-saving technology-based innovation is the one-time investment, in which the well-established hospitals and healthcare centers invest the money only once for the purpose to purchase technologically advanced diagnostic equipment and the remaining proportion of capital is then used for hospital's growth. This is a cost-saving strategy as per the hospital's policy. 

In the case of the cost-increasing technology-based innovations, the money invested over the equipment is recovered from the patients by charging them for diagnostic services and these charges keep on increasing as the hospital receives a greater patient volume. This is a cost-increasing strategy used by various well-established hospitals over their customers.  

The example of cost-saving technology-based innovation is the installation of advanced diagnostic equipment at the hospital. In this, the hospital purchases technologically advanced equipment only once that will be used for almost a decade or more (if there is no major breakdown) to provide diagnostic services to a large segment of the population by which the invested money will be recovered. The example of technologically advanced equipment is the C-arm X-ray machine.

The example of cost-increasing technology-based innovations is the money charged by the hospital from their patients. In this, the volume of patients received by the hospital increase with the hospital's move to invest money on promotion and marketing activities after the purchase of equipment. The increase in the volume of the patient increases the demand for services thus the cost of services is also raised. For example, the charge for diagnostics increases with the increase in the cases in which fracture is reported by the doctor. 

The use of cost-increasing technology-based innovation will continue because of the increase in demand with the growth of the healthcare organization. As the disease conditions are increasing with this demand of hospitals are increasing for reducing the mortality among the population and maintaining the health of people. Hospitals have been invested for equipment and technology for once but their cost increases are high because of more usage of technology for example for once hospital management will invest over technology such as MRI (Magnetic resonance imaging ) machine and because of the high demand of radiological test their cost is increasing which will provide the financial profit to the organization and help to increase the productivity or better outcomes from the organization.

References:

Institute of Medicine (US) Committee on Technological Innovation in Medicine; Gelijns AC, Halm EA, editors. The Changing Economics of Medical Technology. Washington (DC): National Academies Press (US); 1991. (Medical Innovation at the Crossroads, No. 2.) 2, The Diffusion of New Technology: Costs and Benefits to Health Care. Available from: https://www.ncbi.nlm.nih.gov/books/NBK234309/