The Executive Suite: Costs vs. benefits of new technology in healthcare

I read the Bomber Mafia by Malcolm Gladwell, which weaves a riveting tail of persistence, innovation, and costs of waging war. In this book he describes the World War II story of supplying fuel to B-29 bombers for the invasion of Japan in 1942. The Indian city closest to Japan was Kolkata (Calcutta) located in the eastern India. The planes with the fuel would fly to an airfield in Chengdu, China. The planes would refuel in Chengdu and fly to Japan to drop bombs on military and industrial sites that were supporting their war effort. After dropping their bombs, the planes would return to Chengdu pick up fuel and return to Kolkata to repeat the process.

Now the cost-benefit of this attempt to provide fuel for the B-29 bombers. The Himalayas are located between Kolkata and Chengdu making the flight over the mountains very dangerous. Nearly 700 B-29 bombers crashed while trying to navigate over the Himalayas. At issue was that it took twelve gallons of B-29 gasoline to bring just once gallon of fuel over the mountains.

It gets even worse. On June 13, 1944, ninety-two B-29s took off from Kolkata and only seventy-nine made it to Chengdu. Only one plane was able to hit the target of a steelwork’s facility in southern Japan! The Allied command concluded that it was insane to spend twelve gallons of aviation fuel to go over the mountains to deliver one gallon of gas to the other side. The take home message was that this great cost offered minimal benefit.

So, what does this story have to do with the healthcare profession?

Just as any business including the military, government, and healthcare must weigh the cost of implementing a new idea or technology and consider the benefits from such a decision. The cost-benefit analysis (CBA) is a systematic approach for evaluating the economic feasibility of a project or decision by comparing the costs and benefits associated with it. In the healthcare industry, CBA plays a crucial role in assessing the value of various interventions, programs, technologies, and policies. Here are some examples of cost-benefit analysis in the healthcare sector:

Vaccination programs:

Costs: Expenses related to vaccine development, production, distribution, and administration.
Benefits: Reduction in the number of cases, hospitalizations, and deaths, leading to overall healthcare cost savings and improved public health.

Telemedicine implementation:

Costs: Initial investment in technology, training, and time to implement the program.
Benefits: Reduced travel costs for patients, improved access to healthcare, efficient use of physician time, and potential savings in emergency room visits.

Preventive health screenings:

Costs: Screening tests, outreach programs, physician, or allied health personnel time, and associated administrative expenses such as filing insurance or obtaining a sponsor for the screening program.
Benefits: Early detection and prevention of diseases, leading to lower treatment costs and improved overall health outcomes.

EHR adoption:

Costs: Implementation of EHR systems, training, and maintenance.
Benefits: Improved efficiency, reduced medical errors, and better coordination of care, potentially leading to cost savings and enhanced patient outcomes.

Marketing and practice promotion:

Costs: Cost of conventional promotion via radio, TV, newspaper. Outreach, materials, and educational events.
Benefits: Increase in new patients to the practice. Identifying specific disease conditions that the practice has interest and expertise. Targeting patients in certain zip codes, or patients with certain CPT codes

Chronic disease management programs:

Costs: Program development, monitoring, and patient education.
Benefits: Better management of chronic conditions, reduced hospital admissions, and potential cost savings through preventive measures.

Bottom Line: In each of these examples, a thorough cost-benefit analysis conducted prior to implementation of a new program, technology, and interventions would involve quantifying both the direct and indirect costs and benefits, considering factors such as long-term outcomes, societal impact, and the time value of money.