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

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  • 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.

Suggested Citation

  • Farasat A.S. Bokhari, 2001. "Managed Care and the Adoption of Hospital Technology: The Case of Cardiac Catheterization," HEW 0110001, EconWPA.
  • 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
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/hew/papers/0110/0110001.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
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    10. 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.
    11. 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.
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    Cited by:

    1. Rosella Levaggi & Michele Moretto & Vincenzo Rebba, 2009. "Investment decisions in hospital technology when physicians are devoted workers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(5), pages 487-512.

    More about this item

    Keywords

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

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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