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Innovation Diffusion under Budget Constraints: Microeconometric Evidence on Heart Attack in France

In: Contributions in Memory of Zvi Griliches


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  • Brigitte Dormont
  • Carine Milcent


This paper studies the relationship between the diffusion of innovative procedures for the treatment of heart attack and distributions of the cost and length of hospital stays. Using a sample of 5,681 stays observed in French public hospitals, we use microsimulation techniques to highlight various effects on the shifts in the overall distribution of the costs and length of stays : (i) the effect of the adoption of new techniques by hospitals (between hospital diffusion) ; (ii) the effect of the diffusion of technological progress within hospitals ; (iii) the effect of changes in patients' characteristics (age, comorbidities). This decomposition approach is used in the studies on the relationship between education and income distribution where observed distributions are compared to counterfactual distributions built by replacing some estimated parameters with their counterparts estimated from another country or time period. Our work shows that between 1994 and 1997 hospitals faced two main causes of rises in costs : firstly, diffusion of technological progress, with increasing use of costly innovative procedures such as angioplasty ; secondly, patients'epidemiological state worsened, since they became older and had more secondary diagnoses. These two factors induced sizeable shocks in cost distribution. Over this period, French public hospitals were financed by a global budget, and their budgets increased very slowly. However, international comparison shows that diffusion of technological progress for AMI treatment was similar in France and in comparable countries. How did French hospitals deal with their financial constraints ? Our study shows that they greatly reduced the length of stays for patients at the bottom of the distribution. This reduction in the length of stays appears to have enabled hospitals to finance the diffusion of angioplasty. Obviously, such a strategy cannot be sustained in the long run without jeopardizing the quality of care.

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This chapter was published in:

  • Jacques Mairesse & Manuel Trajtenberg, 2010. "Contributions in Memory of Zvi Griliches," NBER Books, National Bureau of Economic Research, Inc, number mair10-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12251.

    Handle: RePEc:nbr:nberch:12251

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Dormont, Brigitte & Milcent, Carine, 2005. "How to regulate heterogeneous hospitals ?," Economics Papers from University Paris Dauphine 123456789/5425, Paris Dauphine University.
    2. John DiNardo & Nicole M. Fortin & Thomas Lemieux, 1995. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," NBER Working Papers 5093, National Bureau of Economic Research, Inc.
    3. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
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    Cited by:
    1. Brigitte Dormont & Anne-Laure Samson, 2007. "Intergenerational inequalities in GPs’ earnings: experience, time and cohort effects," EconomiX Working Papers 2007-34, University of Paris West - Nanterre la Défense, EconomiX.
    2. Gobillon, Laurent & Milcent, Carine, 2012. "Spatial Disparities in Hospital Performance," IZA Discussion Papers 6936, Institute for the Study of Labor (IZA).
    3. Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth: reassessing the threat of ageing," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 947-963.
    4. Laurent Gobillon & Carine Milcent, 2008. "Regional disparities in mortality by heart attack: evidence from France," PSE Working Papers halshs-00586837, HAL.
    5. Milcent, Carine & Dormont, Brigitte & Durand-Zaleski, Isabelle & Steg, Philippe Gabriel, 2007. "Gender differences in hospital mortality and use of percutaneous coronary intervention in acute myocardial infarction : microsimulation analysis of the 1999 nationwide french hospitals database," Economics Papers from University Paris Dauphine 123456789/5424, Paris Dauphine University.


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