Improving Hospital Care through Smarter Medical Devices

Hoping to increase competitiveness and improve patient outcomes, Taiwan’s hospitals are investing in high-value medical devices and artificial intelligence. But finding a balance between state-of-the-art equipment and affordable services remains a challenge.

Despite continuous increases in the National Health Insurance (NHI) budget and raised premiums, Taiwan’s hospitals face progressively strained finances and stiff competition. To boost revenues and stand out among the crowd, many hospitals are investing in new and innovative medical equipment.

Taipei Veterans General Hospital is among the top 20 medical centers in the world due to its highly skilled staff and advanced medical equipment and facilities. Apart from tending to regular patients, the center has also been entrusted with the special task of caring for Taiwan’s current and former presidents.

“Because of our mission, we need to be Taiwan’s flagship public hospital,” says Lee Wui-Chiang, director of Taipei Veterans’ Department of Medical Affairs and Planning. “A majority of our attending physicians have received training abroad. I think that’s the most important aspect – the human capital – but we also prioritize investments in the environment and the best possible equipment and facilities.”

Dr. Lee Wui-Chiang, director of Taipei Veterans’ Department of Medical Affairs and Planning, aims to balance the hospital’s investments in cancer treatment with upgrades of medical equipment for its non-cancer patients. Photos: Taipei Veterans General Hospital

The hospital has invested heavily in high-value medical equipment and digitalization in the past few years as a part of its overall development strategy, citing increased competitiveness, risk diversification, and improved patient outcomes as major reasons for the investments.

Lee additionally notes that his hospital, among others, aims to offer the latest treatments for Taiwanese patients at an affordable price compared to what they would pay internationally. “In the past, patients had to go to the U.S. or Japan to seek advanced treatments,” he says. “We want to be able to offer the best and newest treatments domestically.”

In addition to the value it provides to local patients, the installation of sophisticated medical equipment is also expected to increase Taiwan’s ability to attract medical tourism in the future. Before the COVID-19 pandemic, Taiwan was a popular destination for overseas patients looking to undergo certain procedures.

The exact number of medical tourists that were arriving in Taiwan pre-COVID is difficult to calculate, as a large number of patients took advantage of the 90-day visa-free entry enjoyed by many countries. But according to estimates, around 300,000 tourists sought medical treatment in Taiwan annually prior to the pandemic.

Cancer treatment prioritized

Around 35% of patients at Taipei Veterans are receiving treatment for cancer. Because any late-stage cancer is likely to have a bleak outcome regardless of available treatment options, investing in diagnostic equipment to identify cancers in the early stages has been high on the center’s investment agenda.

The hospital currently has nine magnetic resonance (MR) and nine computed topography (CT) scanners, but its latest diagnostics investment was in Micro-Pet, a highly innovative non-invasive nuclear medicine imaging technique that produces a three-dimensional image of the biochemistry of living subjects.

For the benefit of its cancer patients, Taipei Veterans General Hospital is equipped with nine CT scanners and nine MR scanners. Photos: Taipei Veterans General Hospital

“We can now use about one-fifth of the time and radiation exposure to identify a lesion compared to a decade ago,” says Lee. “For 20 years, we could only identify lung cancer when the tumor was about one centimeter but now, using our advanced imaging tools, we can identify it at less than half a centimeter.”

For resectable tumors – those that can be removed with surgery – Taipei Veterans has built 17 new operation rooms, set to open in 2022. Three of these are equipped with the newest da Vinci robotic-assisted surgery tools developed by U.S.-headquartered medical technology firm Intuitive. The da Vinci system allows surgeons to perform minimally invasive procedures involving small incisions that increase precision and can assist in accelerating the recovery process for patients.

The hospital’s latest investment in cancer treatment is a NT$4.5 billion (US$162 million) heavy-ion radiation center for carbon radiation therapy. Proton and carbon radiation therapy are newer and safer alternatives to traditional radiation therapy and drastically reduce treatment times and side effects while improving patient outcomes.

Taipei Veterans General Hospital recently invested in a heavy ion cancer treatment center. Photos: Taipei Veterans General Hospital

“Our carbon radiation center is the first one in Taiwan,” says Lee, adding that to date, there are less than 10 such centers worldwide. “As for proton therapy, Taiwan has about 10 stations, which is the highest density in the world.”

Although lower than in most other countries, the out-of-pocket costs for these cancer treatments in Taiwan are still only affordable for the wealthy. Proton and carbon therapy have a price tag of about NT$0.5-1 million.

While cancer treatment takes prevalence in the hospital’s upgrades, Lee notes that the hospital also focuses on tending to the two-thirds of patients at Taipei Veterans who are non-cancer patients by investing and upgrading other medical equipment.

“For hospitals, it’s difficult to make perfect investment decisions on when to upgrade what equipment,” he says. “We need to keep pace with the international standard. But medical devices are a bit like the iPhone – there are constant updates with new functions and features.”

Diversifying risks

Taipei Veterans earns 20% of its revenue from providing out-of-pocket medical services and 80% from services covered by Taiwan’s NHI scheme. NHI reimbursement is based on a point system, in which a basic benefit budget is allocated to four sectors (dentistry, Chinese medicine, Western-medicine clinics, and hospitals) in six geographic regions across Taiwan. Regions with higher expenses and more beneficiaries receive a larger piece of the pie.

Healthcare providers bill the regional NHI Administration according to the points acquired. They then receive payment responding to the number of billed points multiplied by a floating region-specific conversion factor. As a result, regional hospitals and care centers compete against one another for patients and reimbursements.

“Because the payment is fixed, hospitals always get a 10% discount on the reimbursement,” says Lee. “This means that if I earn 100 points, I can only get 90 dollars, so I always need to acquire 10% more to get the market share.” He adds that due to regional competition, “I need to keep and expand my market; otherwise, the money will flow somewhere else.”

Lee explains that hospitals in Taiwan are divided into four tiers: medical centers, community hospitals, and local private clinics. Hospitals, in particular those that are privately owned, tend to avoid relying too heavily on NHI reimbursement due to the potential financial instability of doing so.

As a result, many hospitals intentionally and strategically create out-of-pocket services, causing complaints among many patients who expect the insurance premium they pay to cover their medical treatments. Some hospitals’ out-of-pocket services represent close to half of their total revenue.

“That’s a big issue for Taiwan’s middle- and low-income groups,” says Lee. “It creates health inequity, even though the government has been trying to narrow the gap. This is happening everywhere in the world, not just here. In Taiwan, we’re trying our best, but there is still a healthcare gap between the rich and the poor and between the urban and rural areas.”

Moreover, introducing medical devices with improved functionality to the Taiwan market might have limited profitability for the companies that produce them. Reimbursement prices for devices submitted in the new-function category are calculated using a formula based on the existing price with a markup of around 15-30% – a number that often insufficiently reflects product value and cost.

The medical devices industry has also noted difficulties in receiving approval of innovative new devices in Taiwan, which delay the process of market entry. Some new procedure applications undergo a Health Technology Assessment (HTA) and receive a temporary self-pay code during their National Health Insurance Agency (NHIA) reviewing period.

But most new procedure applications do not undergo an HTA. In those cases, the medical device company bears the responsibility to arrange for each hospital to submit a new patient-self-pay procedure application during the review period. This time-consuming process involving ample paperwork creates a barrier for new and innovative procedures to enter the Taiwan market.

AI as the vanguard

During the pandemic, artificial intelligence (AI) has transformed the way healthcare is delivered globally, and it continues to have massive potential for improving healthcare services. Using AI, healthcare professionals can achieve earlier detection of many diseases, reduce human error, and save time and money.

Taipei Veterans invests heavily in AI, and Lee notes that the hospital’s most prominent recent investment is its imaging diagnosis for brain scans.

“We have collected more than 10,000 high-quality MR images of brain tumors,” he says. “These images are saved digitally, and now we use AI for deep learning. When I upload an image, the AI can tell me how likely the patient is to have a brain tumor, with over 90% accuracy. We also use AI to check lung x-rays and see how likely a patient is to have COVID.”

Among many other areas, AI is also used to diagnose glaucoma, a group of eye conditions that damage the optic nerve. Healthcare professionals can use their phones to take a picture of the eye and upload it to the AI system, which helps with making a diagnosis. Another popular use for AI is diagnosing retinal decay caused by diabetes by photographing the patient’s pupil.

GE Healthcare, a manufacturer and distributor of diagnostic imaging agents and radiopharmaceuticals for imaging modalities, has also made several recent investments in AI-driven healthcare. The company has embedded deep learning technology into its devices, including its MR and CT scans, to increase the frequency of advanced self-exams for prevention, as well as to facilitate earlier detection.

“The clinical application of AI in mammography allows users to detect small lesions in self-exams, while the GE Venue Ultrasound has been designed specifically for lung and cardiac function evaluation for CCU/ICU patients,” GE Healthcare told Taiwan Business TOPICS in a written statement.

In 2019, GE Healthcare launched a comprehensive intelligence platform, called Edison, which the company notes is “designed to help achieve greater efficiency, improve patient outcomes, and increase access to care.” The AI-driven platform turns complex data from the company’s software and medical devices into advanced algorithms that it deploys in devices and workflows via the cloud.

AI technology is also being used to create novel adjustable treatment approaches. In September, China Medical University Hospital in central Taiwan became the first hospital within the Greater China region to use Ethos, an adaptive AI-driven therapy for advanced cancer treatment developed by Siemens Healthineers subsidiary Varian Medical Systems.

Varian’s Ethos, an adaptive AI-driven therapy for advanced treatment, was introduced at China Medical University Hospital in central Taiwan in September. Photo: Varian Medical Systems

Ethos uses an AI algorithm to assist doctors with initial planning, on-couch adaptation – in which clinicians review changes in the patient’s anatomy and reassess, adjust, and adapt the treatment plan accordingly – and monitoring of treatments in a time-saving manner. This is expected to lower costs for both clinics and patients.

“On an increasingly regular basis, clinicians can look at physiological changes in the patient to account for macro fluctuations in the tumor’s shape and position due to changes in nearby organs,” Varian wrote to TOPICS in late September. “The AI and automation that the future of adaptive therapy will incorporate may also empower clinicians to do more in less time. And as the future of adaptive therapy may be more affordable, clinicians across the globe will be able to leverage the technology in order to deliver better patient experiences.”

The future of healthcare seems to lie in smart upgrades, connectivity, and AI integration. For upcoming investment decisions, Lee says that cancer treatment and AI will continue to play a pivotal role. “Heavy-ion cancer treatment is our current priority,” he says. “Since the technology is new, we will continue to develop the best usage in the next few years.” He adds that “we’re focusing on how to adopt AI and digitalization and find a balance between focusing on cancer and non-cancer patients. By keeping up with what’s happening internationally, I think we’ll be able to find a good strategy.”

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