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Technological adoption in health care

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  • Pedro Pita Barros
  • Xavier Martinez-Giralt

Abstract

This paper addresses the impact of payment systems on the rate of technology adoption. We present a model where technological shift is driven by demand uncertainty, increased patients benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favors more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 413.

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Date of creation: Nov 2009
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Handle: RePEc:bge:wpaper:413

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Keywords: health care; technology adoption; payment systems;

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  7. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
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Cited by:
  1. Corinna Sorenson & Michael Drummond & Beena Bhuiyan Kahn, 2013. "Medical technology as a key driver of rising health expenditures: disentangling the relationship," LSE Research Online Documents on Economics 48043, London School of Economics and Political Science, LSE Library.
  2. David H. Howard & Yu-Chu Shen, 2011. "Comparative Effectiveness Research, COURAGE, and Technological Abandonment," NBER Working Papers 17371, National Bureau of Economic Research, Inc.

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