Medical Devices and the Veterans Administration February 1985 NTIS order #PB87-117677 Recommended Citation: Medical Devices and the Veterans Administration—A Technical Memorandum (Washing- ton, DC: U.S. Congress, Office of Technology Assessment, OTA-TM-H-16, February 1985). Library of Congress Catalog Card Number 85-600509 For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, DC 20402 Preface This technical memorandum is part of a larger assessment of Federal policies and the medi- cal devices industry, requested by the Senate Committee on Labor and Human Resources. In its endorsement of the overall assessment, the Senate Committee on Veterans’ Affairs requested the Office of Technology Assessment (OTA) to address specifically the activities of the Vet- erans Administration (VA) regarding device development and procurement. The VA is an im- portant provider of medical devices and services for diagnosis, treatment, and rehabilitation of the veteran population. OTA found that the VA’s current system of medical device-related research, development, evaluation, procurement, and use has a number of weaknesses. Better analytical methods for evaluating and procuring the most appropriate devices at least cost could be applied at various points in technology development and use. In addition, VA research and development, evalua- tion, and procurement could be better integrated. Several new VA programs and committees may improve the evaluation and procurement processes and help to integrate the functions, espe- cially the purchase of major new medical technologies. Valuable guidance was provided by the advisory panel for the OTA assessment on Federal Policies and the Medical Devices Industry, chaired by Richard R. Nelson, Professor of Econom- ics, Yale University. A large number of persons in the VA and in the medical devices industry were consulted. John C. Langenbrunner, analyst, is the principal. author of this technical memo- randum. Other key OTA staff involved in its development were Cynthia P. King, Katherine E. Locke, and Jane E. Sisk. JOHN H. GIBBONS Director . Ill — ————— Advisory Panel for Federal Policies and the Medical Devices Industry Richard R. Nelson, Chair Institute for Social and Policy Studies, Yale University New Haven, CT William F. Ballhaus Robert M. Moliter International Numatics, Inc. Medical Systems Division Beverly Hills, CA General Electric Co. Washington, DC Ruth Farrisey Massachusetts General Hospital Louise B. Russell Boston, MA The Brookings Institution Washington, DC Peter Barton Hutt Covington & Burling Earl J. Saltzgiver Washington, DC Foremost Contact Lens Service, Inc. Salt Lake City, UT Alan R. Kahn Consultant Rosemary Stevens Cincinnati, OH Department of History and Sociology of Science University of Pennsylvania Grace Kraft Philadelphia, PA Kidney Foundation of the Upper Midwest Cannon Falls, MN Allan R. Thieme Amigo Sales, Inc. Joyce Lashof Albuquerque, NM School of Public Health University of California Eric von Hippel Berkeley, CA Sloan School Massachusetts Institute of Technology Penn Lupovich Cambridge, MA Group Health Association Washington, DC Edwin C. Whitehead Technicon Corp. Victor McCoy Tarrytown, NY Paralyzed Veterans of America Washington, DC OTA Project Staff: Medical Devices and the Veterans Administration Roger Herdman, Assistant Director, OTA Health and Life Sciences Division Clyde J. Behney, Health Program Manager Jane E. Sisk, Project Director Cynthia P. King, Study Director-’ John C. Langenbrunner, Study Director’ Katherine E. Locke, Research Assistant Ann Covalt, Editor Virginia Cwalina, Administrative Assistant Rebecca I. Erickson, P. C./Word Processor Specialist Brenda L. Miller, P. C./Word Processor Specialist Jennifer Nelson, Secretary3 Principal Contractor Ralph Bradburd, Williams College I From December 1983. ‘Until November 1983 ‘Until January 1984. Glossary of Acronyms AMVETS—American Veterans of World War II, MEDIPP —Medical District Initiated Program Korea, and Vietnam Planning BVA —Blinded Veterans Association MR&A —Marketing Research and Analysis CID —Commercial Item Description NAS —National Academy of Sciences CT —computed tomography NMR —nuclear magnetic resonance DAV —Disabled American Veterans NSO —National Service Officer DM&S —Department of Medicine and Surgery OTA —Office of Technology Assessment DOD —Department of Defense PSAS —Prosthetics and Sensory Aids Service DRGs —diagnosis-related groups PTEC —Prosthetic Technology Evaluation ETIP —Experimental Technology Incentives Committee Program PVA —Paralyzed Veterans of America FDA —Food and Drug Administration, R&D —research and development Department of Health and Human Rehabilitation R&D— Rehabilitation Research and Services Development Service FSS –Federal Supply Schedule T&E –Testing and Evaluation Staff GAO —General Accounting Office VA —Veterans Administration GRECC —Geriatric Research, Education, and VAMKC —VA Marketing Center Clinical Centers VAPC —VA Prosthetics Center HSR&D —Health Services Research and Develop- VFW —Veterans of Foreign Wars of the United ment Service States vi Contents Chapter Page Page 1. Introduction and Summary . 3 Appendix B: Medical Devices and the Veterans Background and Scope of This Study . 3 Administration: The Perspective of Veterans’ Summary . 4 Service Organizations . 80 Veterans and the VA Health Care Delivery System 4 Research and Development . 5 Appendix C: Veterans Administration Procurement Testing and Evaluation . 5 and the Market for Medical Equipment . .86 Marketing, Procuring, and Supplying Devices . 6 References . .103 . Adopting, Using, and Financing Devices . 8 Conclusions . 8 List of Tables Organization of This Technical Memorandum ... 9 2. The Veterans Administration and Health Care: Table No. Page An Overview . 13. 1. Summary of Rehabilitation Research and Historical Perspective . 13 Development Projects, Fiscal Year 1983 . .26 VA Health Care Services . 15 2. Veterans Administration R& D Budget Overview . 27 Acute Care Services . .15 3. Selected Device Purchases by the Veterans Long-Term Care Services . 16 Administration Using Federal Supply Schedule Ambulatory Care . .17 Contracts, Fiscal Year 1983 . 49 Other Services . 17 4. Veterans Administration Supply Support to The Veteran Patient Population . 18 Other Federal Facilities, Fiscal Year 1982 . 50 Veterans’ Service Organizations . 18 5. Priority Purchasing Sources for VA Medical Centers . 51. 3. Research and Development of Devices . 23 6. Outlays for Veterans’ Benefits and Services, Medical Research . 23 Fiscal Years 1981-83 . .63 Research Programs . 23 7. Sample Rehabilitative Devices Distributed to Other Medical Research . 24 Veterans, Fiscal Year 1982. 68 Health Services Research and Development . 24 8. VA Controlled Item List for Medical and Dental Rehabilitation Research and Development . 25 Equipment, 1982 . 71. Rehabilitation R&D Centers . 25 C-1.. ‘Sum of Absolute Values of Annual Technology Transfer . 27 Percentage Changes in Vendors’ VA Discussion . 27 Marketing Center X-ray Equipment Market Shares, 1979-82 . 88 4. Testing and Evaluating Devices . 33 Prototype Devices . 33 C-2, Annual VA Marketing Center Procurement Commercially Available Devices . 35 of CT Scanning Equipment, 1979-82 . 89 The VA Prosthetics Center . 35 C-3. Annual Percentage Change in VA Marketing Testing and Evaluation Staff, VA Marketing Center Procurement of Nuclear Medical Equipment, 1979-82 . 92 Center . 38 C-4. Changes in Rankings of Four Largest Sellers Discussion . 41 of Nuclear Medical Equipment Through 5. Marketing, Procuring, and Supplying Devices . 45 the VA Marketing Center, 1979 -82 . 92 Prototype Devices . 45 C-5. Sum of Absolute Values of Year-to-Year Commercially Available Devices . 47 Percentage Changes in Vendors’ VA Marketing Marketing . 47 Center Nuclear Medical Equipment Market Procurement and Supply . 48 Shares, 1979 -82 . .......92 Discussion . 56 List of Figures 6. Adopting, Using, and Financing Devices . 61 61 Veteran Eligibility for Program; and Services . Figure No. Page Income Maintenance . 61 1.‘The Development and Diffusion of Medical - Health and Medical Care. 62 Technologies . 4 VA Financing and Resource Allocation . 63 2. Organization Chart of the Management Initiatives . 63 Veterans Administration, May 1984 . 7 Adoption and Use of Devices . 66 3. VA Department of Medicine and Surgery . 14 Rehabilitative Devices . 66 4. Medical Center Hospital . 16. 70 Medical Equipment and Supplies . 5. The Innovation Process . .46 Social and Political Forces. 71 6, Veterans Administration, Department of Medicine Appendix A: Acknowledgments and Health Program and Surgery Medical Districts, 1983 . 64 Advisory Committee . 77 vii Chapter 1 Introduction and Summary Chapter 1 Introduction and Summary BACKGROUND AND SCOPE OF THIS STUDY Many medical devices have been developed in for its health care services, and the VA supports recent years, and medical practice has changed a full range of these services. These same charac- accordingly, lengthening and improving the lives teristics make the VA an excellent setting for eval- of American people.l In serving its special popula- uating medical devices and technologies (109,118). tion, the Veterans Administration (VA) is one in- Since the late 1940's the VA has been an impor- creasingly important provider of these sophisti- tant source of research and development funds, cated medical devices and services for diagnosis, especially for rehabilitative technologies and de- treatment, and rehabilitation. vices. The VA evaluates new