Genomic Health, Inc. (GHDX), Merck & Co., Inc. (MRK): Rest in Peace, Medicare?

Genetic testing stands out as one current example of how scientific advances can help reduce medical costs. Genomic Health, Inc. (NASDAQ:GHDX) makes genetic diagnostic tests for breast, colon, and prostate cancer. Half of the patients diagnosed with prostate cancer each year actually have a very low risk of the cancer progressing. However, 90% of these low-risk patients still undergo surgery or radiation — at a cost of tens of thousands of dollars per patient. Genomic Health, Inc. (NASDAQ:GHDX)’s genetic test helps identify which patients really need more extensive treatment and holds the potential to reduce overall costs.

Another solution lies in more effective drugs that could reduce hospital stays. Research shows that the hospital stay rate for Medicare patients with heart failure has fallen over the past 15 years. Drugs that help prevent heart problems have been a key factor in this improvement. And these drugs are continually getting better.

Merck & Co., Inc. (NYSE:MRK), for example, received regulatory approval in May for a new cholesterol drug called Liptruzet. The drug combines another Merck & Co., Inc. (NYSE:MRK) medication, Zetia, with Lipitor. Clinical studies found that Liptruzet reduces “bad” cholesterol levels that can lead to heart problems by as much as 61% — much better than either Zetia or Lipitor by themselves.

Telemedicine also holds promise for helping keep Medicare beneficiaries out of the hospital. Consulting firm Deloitte thinks that as much as $400 billion annually could be saved using telemedicine applications. QUALCOMM, Inc. (NASDAQ:QCOM) stands as one of the leaders in technology that enables medical information from patients at home to be sent easily and inexpensively to clinical professionals. The mobile telecommunications giant has formed partnerships with at least 18 medical application companies, 49 medical device makers, and 80 service providers to deliver telemedicine solutions.

Granted, it will take many more of these types of innovations to make a significant dent in the problems facing Medicare. But there are plenty of innovative companies trying to come up with the next great medical advance.

Rest in peace, Medicare? No. Instead, work like crazy, American free enterprise.

The article Rest in Peace, Medicare? originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Genomic Health and owns shares of Genomic Health.

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