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Managed Care and Technology Adoption in Health Care: Evidence from Magnetic Resonance Imaging

  • Laurence C. Baker
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    Increasing managed care activity could influence the adoption and diffusion of new medical technologies. This paper empirically examines the relationship between HMO market share and the diffusion of magnetic resonance imaging (MRI) equipment. Across markets, increases in HMO market share are associated with slower diffusion of MRI into hospitals between 1983 and 1993, and with substantially lower overall MRI availability in and outside of hospitals in the mid and later 1990s. High managed care areas also had markedly lower rates of MRI procedure use. These results suggest that technology adoption in health care can respond to changes in financial and other incentives associated with managed care, which may have implications for health care costs and patient welfare.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8020.

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    Date of creation: Nov 2000
    Date of revision:
    Publication status: published as Baker, Laurence C. and Ciaran S. Phibbs. "Managed Care, Technology Adoption And Health Care: The Adoption Of Neonatal Intensive Care," Rand Journal of Economics, 2002, v33(3,Autumn), 524-548.
    Handle: RePEc:nbr:nberwo:8020
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    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    2. Hill, Steven C. & Wolfe, Barbara L., 1997. "Testing the HMO competitive strategy: An analysis of its impact on medical care resources," Journal of Health Economics, Elsevier, vol. 16(3), pages 261-286, June.
    3. Lee, Robert H. & Waldman, Donald M., 1985. "The diffusion of innovations in hospitals : Some econometric considerations," Journal of Health Economics, Elsevier, vol. 4(4), pages 373-380, December.
    4. Globerman, Steven, 1982. "The adoption of computer technology in hospitals," Journal of Behavioral Economics, Elsevier, vol. 11(2), pages 67-95.
    5. 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.
    6. Laurence Baker & Joanne Spetz, 1999. "Managed Care and Medical Technology Growth," NBER Chapters, in: Frontiers in Health Policy Research, volume 2, pages 27-52 National Bureau of Economic Research, Inc.
    7. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
    8. 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.
    9. Laurence C. Baker & Martin L. Brown, 1999. "Managed Care, Consolidation Among Health Care Providers, and Health Care: Evidence from Mammography," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 351-374, Summer.
    10. Fuchs, Victor R, 1996. "Economics, Values, and Health Care Reform," American Economic Review, American Economic Association, vol. 86(1), pages 1-24, March.
    11. Laurence C. Baker & Ciaran S. Phibbs, 2000. "Managed Care, Technology Adoption, and Health Care: The Adoption of Neonatal Intensive Care," NBER Working Papers 7883, National Bureau of Economic Research, Inc.
    12. Noether, Monica, 1988. "Competition among hospitals," Journal of Health Economics, Elsevier, vol. 7(3), pages 259-284, September.
    13. Louise B. Russell, 1977. "The Diffusion of Hospital Technologies: Some Econometric Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 12(4), pages 482-502.
    14. 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.
    15. Romeo, Anthony A. & Wagner, Judith L. & Lee, Robert H., 1984. "Prospective reimbursement and the diffusion of new technologies in hospitals," Journal of Health Economics, Elsevier, vol. 3(1), pages 1-24, April.
    16. Baker, Laurence C & Corts, Kenneth S, 1996. "HMO Penetration and the Cost of Health Care: Market Discipline or Market Segmentation?," American Economic Review, American Economic Association, vol. 86(2), pages 389-94, May.
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