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Innovation diffusion under budget constraints : Microeconometric evidence on heart attack in France

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  • Dormont, Brigitte
  • Milcent, Carine

Abstract

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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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/5430/1/innovation_diffusion.PDF
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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/5430.

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Date of creation: 2005
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Publication status: Published in Annales d'Economie et de Statistique, 2005, no. 79-80. pp. 697-726.Length: 29 pages
Handle: RePEc:dau:papers:123456789/5430

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Keywords: Health Care; length of stays; cost; Innovation; hospitals;

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References

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  1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, Econometric Society, vol. 64(5), pages 1001-44, September.
  2. Dormont, Brigitte & Milcent, Carine, 2005. "How to regulate heterogeneous hospitals ?," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/5425, Paris Dauphine University.
  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. Gobillon, Laurent & Milcent, Carine, 2012. "Spatial Disparities in Hospital Performance," IZA Discussion Papers 6936, Institute for the Study of Labor (IZA).
  2. 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, Paris Dauphine University 123456789/5424, Paris Dauphine University.
  3. Dormont, Brigitte & Samson, Anne-Laure, 2007. "Intergenerational inequalities in GPs' earnings: experience, time and cohort effects," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/6891, Paris Dauphine University.
  4. Huber, Hélène & Grignon, Michel & Dormont, Brigitte, 2006. "Health expenditure growth : reassessing the threat of ageing," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/3881, Paris Dauphine University.
  5. repec:hal:wpaper:halshs-00586837 is not listed on IDEAS

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