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Managed Care and the Adoption of Hospital Technology: The Case of Cardiac Catheterization

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Author Info

  • Farasat A.S. Bokhari

    (University of California, Berkeley)

Abstract

The diffusion of health care technology is influenced by both the total market share of managed care organizations as well as the level of competition among them. This paper differentiates between HMO penetration and competition and examines their relationship to the adoption of cardiac catheterization laboratories in all non-federal, short-term general community hospitals in the U.S. between 1985 and 1995. Results show that a hospital is less likely to adopt the technology if HMO market penetration increases but more likely to adopt if HMO competition increases. Further, the latter effect is non-linear in the number of adopters. In markets where fewer than a critical number of neighboring hospitals have already adopted, the probability of adoption increases with the number of HMOs, but in markets where more than the critical number of neighbors have already adopted, the probability of adoption decreases with the number of HMOs. Thus, in markets where technology is rare, HMO penetration and competition have countervailing effects on the diffusion of technology such that the net effect could be small.

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File URL: http://128.118.178.162/eps/hew/papers/0110/0110001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series HEW with number 0110001.

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Length: 45 pages
Date of creation: 03 Oct 2001
Date of revision:
Handle: RePEc:wpa:wuwphe:0110001

Note: Type of Document - PDF file; prepared on PC - LaTex Preperation via EXP; to print on HP; pages: 45; figures: included
Contact details of provider:
Web page: http://128.118.178.162

Related research

Keywords: technology adoption; managed care; HMO competition; duration models; instrumental variables; rationalized adoption;

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  1. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  2. Laurence Baker & Joanne Spetz, 1999. "Managed Care and Medical Technology Growth," NBER Working Papers 6894, National Bureau of Economic Research, Inc.
  3. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters, in: Frontiers in Health Policy Research, volume 1, pages 77-116 National Bureau of Economic Research, Inc.
  4. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
  5. Sloan, Frank A & Steinwald, Bruce, 1980. "Effects of Regulation on Hospital Costs and Input Use," Journal of Law and Economics, University of Chicago Press, vol. 23(1), pages 81-109, April.
  6. Melnick, Glenn A. & Zwanziger, Jack & Bamezai, Anil & Pattison, Robert, 1992. "The effects of market structure and bargaining position on hospital prices," Journal of Health Economics, Elsevier, vol. 11(3), pages 217-233, October.
  7. David M. Cutler & Mark McClellan, 1996. "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Papers 5751, National Bureau of Economic Research, Inc.
  8. James R. Baumgardner, 1991. "The Interaction between Forms of Insurance Contract and Types of Technical Change in Medical Care," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 36-53, Spring.
  9. 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.
  10. Hodgkin, Dominic & McGuire, Thomas G., 1994. "Payment levels and hospital response to prospective payment," Journal of Health Economics, Elsevier, vol. 13(1), pages 1-29, March.
  11. Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 1995. "The effect of market structure on HMO premiums," Journal of Health Economics, Elsevier, vol. 14(1), pages 81-105, May.
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