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Technological adoption in health care

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  • Barros, Pedro Pita
  • Martinez-Giralt, Xavier

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. JEL codes: I11, I12, Q33

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Bibliographic Info

Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp545.

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Length: 36 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:unl:unlfep:wp545

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Cited by:
  1. 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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