Managed Care and Medical Technology Growth
Many questions about technology growth and development in health care call for a broad-based characterization of technology availability. In this paper, we explore the possibility of producing aggregated estimates of technology availability by constructing an index of technology availability in hospitals. Our index is based on the number of services provided by a hospital, weighted by how rare those services are. We use the index to examine the relationship between managed care and technology availability in hospitals. We find that managed care may have slowed technology growth in the mid 1980s, but in the early 1990s we find little evidence that technology growth in areas with high-HMO market share is any slower than growth in lower market share areas. To the extent that our index captures variation in the costs of new technologies, this finding leaves open the question of whether managed care can help control long term cost growth by slowing technology adoption. We also discuss the general strengths and weaknesses of indices of the type we develop. One concern arises from the considerable variation across individual technologies. We profile several individual technologies and note that conclusions drawn from the aggregated index may not apply to each of the constituent technologies. Nonetheless, this exercise shows that it is feasible to develop and analyze hospital technology indices if aggregated information about technologies is appropriate to the research question.
|Date of creation:||Jan 1999|
|Date of revision:|
|Publication status:||published as Frontiers in Health Policy Research. Garber, Alan M., ed., Cambridge: MIT Press, 1999, pp. 27-52.|
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- David M. Cutler & Louise Sheiner, 1998.
"Managed Care and the Growth of Medical Expenditures,"
in: Frontiers in Health Policy Research, Volume 1, pages 77-116
National Bureau of Economic Research, Inc.
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- Baker, Laurence C., 1997. "The effect of HMOs on fee-for-service health care expenditures: Evidence from Medicare," Journal of Health Economics, Elsevier, vol. 16(4), pages 453-481, August.
- Weisbrod, Burton A, 1991. "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 523-52, June.
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