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Technology offers the health services potentials for improving the quality and scope of medical care, for extending the capacities of health workers, and for gaining control of costs. However, there are obstacles to achieving these potentials, some inherent in the nature and tradition of the medical care process, and some in the structure of management incentives in hospitals and industries that might contribute useful products and services. Spontaneously, professionals from the biomedical and physical sciences have formed coalitions to pursue a variety of technological developments. Most such projects seek an appropriate institutional setting, organizational relationship, and source of support. They seek an optimal balance of institutional, industrial, and government participation. This paper presents a basis for dividing the costs of development between public and private investment and proposes the staging of technological development through trials in government, private, and educational health services. An estimate of justifiable development investments in health technology is an order of magnitude higher than current levels, suggesting that development funds should be viewed as a tax on the revenue stream of the health services rather than a source of competition for research funds.