As medical technology improves, common sense dictates it will become more innovative and sometimes even cheaper. Medical applications on a portable device are not new, remember the old school Palm PDA? It was a must have for physicians and medical students. Just the other day I saw an attending pull out one of those old bricks. Other than the platform, the biggest difference between those Palm medical apps and the iPhone medical apps are the developers. The barrier of entry into making an iPhone medical app is significantly less than it was back in the day. Anyone can make an iPhone medical app (learn some programming, or pay someone) and submit it to the App store. This has both positives and negatives, as documented on this site.

Anyways, before I digress further, this influx of new developers has lead to innovation, and significantly cheaper applications. In order to embrace these applications, insurers are going to have to change their archaic ways, and at the end of the day, it’ll help out their bottom line. So, that leads us to the title of this post, why are Medicare and other insurance companies refusing to pay $150 for text-to-speech software, yet willing to pay $8,000 for a device that does pretty much the same?

There is a fantastic article in the NY Times detailing Medicare and other insurance companies resistance to new portable medical technology. The reason for this resistance lies in the multi-functionality of the devices. Insurance companies will only cover devices that can be used for medical purposes, nothing more. Since mobile devices, like the the iPhone, can be used for non-medical purposes, such as gaming, it "disqualifies" them.

Whats worse is these strict "medical devices" are completely marked up, and why not? If the developers of these products know consumers are limited in their choice of medical applications, why not mark them up?

NY Times Article:

But the prices may seem hard to justify based on components alone. One $5,000 DynaVox product is essentially the speech software bundled with a two-pound keyboard that has a six-inch screen. And the manufacturers mark up standard accessories by as much as 2,000 percent. Prentke Romich, for example, charges $250 for a Bluetooth wireless adapter similar to those that cost $20 in stores…..

…..Betsy Caporale, a speech language pathologist in Danville, Calif., has tested various devices and software with children who have Down syndrome and autism.

The iPhone has been a runaway success with these kids,” she said. “It takes them about 10 minutes to learn how to use the iPhone, and there is this cool factor for them.

I would understand the resistance to the iPhone itself because of the needed AT&T contact, but the iPod Touch would be perfect for these types of applications. No service fee, just the flat rate for the device. Better yet, if I’m an insurance company, I’d pay a developer $8,000 to make a custom iPhone/iPod Touch Medical app that meets my requirements. The barriers of entry into the game have significantly decreased. Companies need to realize this and take advantage of this. End users have already realized this, just look at the success of the App Store.

At the end of the day, will these policies change? I don’t know. I do know one thing though, when there are a limited number of options to choose from, the end user will always pay more for less.