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The Determinants of Technological Change in Heart Attack Treatment

  • David M. Cutler
  • Mark McClellan

This paper examines the sources of expenditure growth in heart attack treatment. We first show that essentially all of cost growth is a result of the diffusion of particular intensive technologies; the prices paid for a given level of technology have been constant or falling over time. We then examine the reasons for this technology diffusion. We distinguish six factors that may influence technology diffusion: organizational factors within hospitals; the insurance environment in which technology is reimbursed; public policy regulating new technology; malpractice concerns; competitive or cooperative interactions among providers; and demographic composition. We conclude that insurance variables, technology regulation, and provider interactions have the largest quantitative effect on technological diffusion. These factors affect both technology acquisition and the frequency of technology use.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5751.

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Date of creation: Sep 1996
Date of revision:
Publication status: published as With Joseph D. Newhouse and Dahlia Remler, published as "Are Medical Prices Declining? Evidence for Heart Attack Treatments", Quarterly Journal of Economics, Vol. 108, no. 4 (November 1998).
Handle: RePEc:nbr:nberwo:5751
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Fuchs, Victor R, 1996. "Economics, Values, and Health Care Reform," American Economic Review, American Economic Association, vol. 86(1), pages 1-24, March.
  2. repec:cup:cbooks:9780521452700 is not listed on IDEAS
  3. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
  4. 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.
  5. David M. Cutler, 1993. "The Incidence of Adverse Medical Outcomes Under Prospective Payments," NBER Working Papers 4300, National Bureau of Economic Research, Inc.
  6. Hoerger, Thomas J., 1991. "'Profit' variability in for-profit and not-for-profit hospitals," Journal of Health Economics, Elsevier, vol. 10(3), pages 259-289, October.
  7. repec:cup:cbooks:9780521459556 is not listed on IDEAS
  8. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
  9. Kessler, Daniel & McClellan, Mark, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 353-90, May.
  10. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1996. "Are Medical Prices Declining?," NBER Working Papers 5750, National Bureau of Economic Research, Inc.
  11. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  12. Robinson, James C. & Luft, Harold S., 1985. "The impact of hospital market structure on patient volume, average length of stay, and the cost of care," Journal of Health Economics, Elsevier, vol. 4(4), pages 333-356, December.
  13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  14. Dranove, David & Cone, Kenneth, 1985. "Do state rate setting regulations really lower hospital expenses?," Journal of Health Economics, Elsevier, vol. 4(2), pages 159-165, June.
  15. Danzon, Patricia, 1984. "The Frequency and Severity of Medical Malpractice Claims," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 115-48, April.
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