Managing Medical Miracles

Replacing worn out hips and knees, bolstering ailing arteries with stents, and regulating heart function with electronic devices—procedures that were once cutting edge—are now commonplace.

New biochemical therapies for beating back cancer arrive on the market every year, as do diagnostic tools that can disclose genetic predispositions to diseases or offer images that reveal sources of pain or malfunction. Unprecedented innovation, especially in biotechnology, medical devices, and advanced diagnostics, has catapulted medicine into a new era.

This all comes with both significant costs and enormous benefits, notes James C. Robinson, PhD, MPH ’81, Kaiser Permanente Professor of Health Economics and director of the new Berkeley Center for Health Technology (BCHT). “New medical technologies offer great opportunity to improve the health and well-being of patients with severe diseases,” says Robinson, “but are also a major driver of the rise in the cost of health care. We need to encourage, and pay more for, appropriate uses of biomedical innovations while we discourage, and pay less for, inappropriate uses.”


The Berkeley Center for Health Technology was established with generous start-up funding from Genentech, one of the most prominent firms in the biotechnology industry and a longtime supporter of the University. BCHT’s mission is twofold: First, it aims to address opportunities and challenges associated with incorporating medical innovations into the standard of care. Second, the center seeks to promote methods of payment that reward innovations while reducing expenditures for less effective treatments. To that end, the center will sponsor roundtables and conferences, conduct case studies and quantitative research, and develop professional education programs for industry leaders, as well as new course offerings for Berkeley students.

robinson and solomon

Kim Solomon and James Robinson

Robinson and colleague Kim Solomon, MBA, MPH ’94, associate director of professional development for the center, are well-positioned to understand the challenges that come with medical innovation. Robinson’s interest in the economics of technological innovation led him to design the statewide Value Assessment and Purchasing of Medical Devices project for the Integrated Healthcare Association. (See this page.) He spent academic year 2007–2008 in Washington, D.C., as editor in chief of the nation’s top health policy journal Health Affairs, and continues to serve as contributing editor in charge of the journal’s new TechWatch section.

Solomon’s passion for this research area builds upon a strong background in health care reimbursement. Before returning to the School in January 2006 as a lecturer and director of the Health Policy and Management (HPM) master’s program, she was a management consultant with expertise in the financing and services sectors of health care. For Solomon, work with BCHT will provide opportunities to look at specific innovations—new drugs, new biologics, new devices—and how each of these will affect the system.


While members of each health care sector have a passion for the potential good of new clinical technology, cohesion is often lost when it comes to marketing, financing, purchasing, reimbursing, and regulating these innovations.

Taken in an economic context of supply and demand, the American population is aging and business is booming. However, the demand side of the health care system— which includes physicians, hospitals, employers, and insurers—has not developed the mechanisms needed to assess the value of what the medical device and pharmaceutical companies are supplying so rapidly and in such great volume. This uncertainty has become a source of misunderstanding and often mistrust.

For example, there may be several choices of artificial knee kits produced by competing companies, but a surgeon must choose just one and could base that decision on any number of factors. Because physicians often have only loose affiliations with a hospital, they have little incentive to share their reasons. Yet it is the hospital that must pay for the devices, and its ability to obtain a competitive price from the manufacturer is hampered if different surgeons insist on using different brands and thereby undermine volume purchasing.

There are also disputes over appropriate use of biopharmaceuticals and medical devices. Mounting evidence suggests that some who could benefit enormously from new drugs, devices, and diagnostics aren’t getting them, while others who aren’t likely to benefit are using them. Huge disparities exist in rates of use and expenditure across geographic areas and depending on a patient’s insurance coverage. Continued progress against cancer, auto-immune conditions, and other serious illnesses requires continued financial investments, but purchasers and consumers feel drug prices are high as it is.

the idea is to stimulate research and implement new methods for managing innovation.In order to balance what he calls “the competing claims of access and affordability,” Robinson proposes a cultural shift. “The relationship among the sectors would move from the contemporary ‘hand-off’ of responsibility from manufacturers to insurers at the time of product launch,” he suggests, “to a framework where manufacturers have greater insight and input into post-launch decisions and insurers have greater insight and input into pre-launch decisions.

“Manufacturers need better information on the coverage, reimbursement, and benefit design strategies pursued by health insurers,” he explains, “while insurers need better information on the pipeline of new products, likely patterns of use, and potential pricing and distribution methods.”

This is where Robinson believes the new center can help. As an academic entity, BCHT will offer data-supported analyses and a neutral ground where cross-sector industry leaders can assess workable solutions to real world challenges. The center will work closely with leaders from each sector—biotech and medical device firms, health insurance plans, and health care delivery organizations—to research and make available knowledge concerning new technologies and develop new methods for coverage, reimbursement, and management.

“The idea is to stimulate research and implement new methods for managing innovation,” says Robinson. “We seek new methods of payment, new forms of insurance, and new forms of clinical management of drugs and devices to get better outcomes for the patients and for the system as a whole.”


Innovation by definition means change, and the study of innovation itself requires innovative research techniques. “The unique challenge to this research is that the methods by which health plans and hospitals seek to manage new technologies change very rapidly,” says Robinson. “Additionally, the drugs and devices that are on the market change very rapidly.” Relying only on traditional research methods, which use existing data sources or involve gathering large samples of new data, would be time consuming and thereby risk rendering results irrelevant. By the time the research was done, a product or device might no longer be on the market.

To accommodate these circumstances, BCHT will pursue a research strategy consisting of three stages: identification of leading organizations and methods; in-depth case studies; and analyses of data covering large populations.

The most basic need is to identify the most creative methods for coverage, payment, and management that are being used by leading health insurers, delivery systems, and/or product manufacturers. To identify these best practices, the center will convene one-day roundtables on particular dimensions of technology management, focusing on issues where there is the potential for cooperation and mutual benefit among the different health care sectors. The roundtables will involve approximately 25 people who often do not see eye to eye, and therein lies the value.

“The whole point is to bring together disparate viewpoints,” says Solomon. “It’s a way of finding neutral ground and trying to have productive conversations, rather than everybody defaulting to their traditional positions.”

From there, relationships are forged that extend into involvement in the second stage of research activity: case studies of best practices in leading health plans, hospital systems, and technology firms. This will involve spending some time at each organization.

“The key point is to get under the hood, as it were, to understand the opportunities and the obstacles,” says Robinson. One organization may be proud to tell its success story; another may be experiencing difficulties and therefore be interested in having outside researchers come in, study what it is doing, and give feedback.

Next the center will conduct data-based analyses assessing the range and impact of management strategies for new technologies across different technology companies, hospitals, or health plans.

The first data-based study for the center, recently funded by the California HealthCare Foundation, will examine patterns and determinants of costs, complications, insurance payments, and other factors for approximately 80,000 patients undergoing any of 14 orthopedic or cardiac procedures in California hospitals in 2008. These data are being collected by the IHA’s value purchasing project for benchmarking and supply chain management, but will be transferred to the University for research purposes. Individual patients and hospitals will not be identified, but the detailed data will permit separating out the effects of disease severity and disability from the economic factors such as hospital scale, purchasing strategy, and insurance contracting.

Other research topics will include coverage and reimbursement for new drugs; methods of payment for physicians and hospitals; insurance design and cost-sharing requirements for patients; and medical management methods that seek to ensure that the right patient is getting the right treatment.


While BCHT is primarily a research entity, it is also committed to sponsoring educational activities that expand the knowledge base of health care industry leaders, as well as current students enrolled in graduate degree programs in public health, business administration, and public policy at Berkeley.

The center will tap into the wealth of campus expertise in insurance, health care organization, and biomedical technology as it conducts professional development workshops for senior staff within biotechnology, health care delivery, and related sectors. The workshops can be tailored to the internal needs of specific organizations on both sides of the development and purchasing continuum.

Current master’s and doctoral students will have the opportunity to serve as graduate student researchers for particular projects and take related courses, such as Robinson’s Health Care Technology Policy course. As director of professional development for the BCHT, Solomon will also develop postgraduate fellowship opportunities and enhance existing field placement opportunities. Historically, the majority of the School of Public Health’s postgraduate fellowships have been in the service and delivery sector at large hospital systems. However, the center recognizes great potential for students also to explore careers in biotechnology and device companies.

The center’s first sponsor, Genentech, has taken on a number Berkeley students, both as summer interns and as permanent employees, with great success. School of Public Health alumna Amanda Schmutzler, MPH ’04, was in the Health Policy and Management program and found much value in a summer internship at Genentech, planning product launches into the managed care marketplace. The following year she took a full-time position within the Managed Care Marketing group and has been working in various capacities at Genentech ever since.

“My internship, in addition to allowing me to apply my educational background to work in a corporate environment, gave me an opportunity to assess, in a short period of time, that Genentech was a good fit for me,” says Schmutzler.

As a hiring manager within the Managed Care Marketing Group, Schmutzler sees new graduates bringing a strong understanding of the inner workings of the health care system to their new jobs. She adds, “Biotechnology is definitely a relevant area of work for an HPM student, the sector is growing, and the products are impacting patients’ lives.”

Solomon is also enthusiastic about creating career connections. This past semester, for example, the center sponsored a half-day workshop on policy approaches to the regulation of biosimilars, biopharmaceuticals that seek to replicate the functions without having the identical structures of biologics already on the market in a manner analogous to the role of generics for traditional non-biologic drugs. The workshop brought together 50 graduate students to analyze and argue the various sides of the biosimilars debate, which has been launched recently by the Obama administration, with input from staff and executives from BCHT, Genentech, and Blue Shield of California.

Says Solomon, “If we educate students more thoroughly on current topics, if we employ them as researchers to allow them to gain practical skills and knowledge, and if we foster relationships with biotechnology and medical device firms, our students will more readily find good employment and the employers will get better-prepared, better-informed graduates who can contribute to their organization that much more quickly. It’s a symbiotic situation, a win-win.” end of line

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