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The impact of technology diffusion in health care markets: Evidence from heart attack treatment

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  • Hentschker, Corinna
  • Wübker, Ansgar

Abstract

Medical technological progress has been shown to be the main driver of health care costs. A key policy question is whether new treatment options are worth the additional costs. In this paper we assess the causal effect of percutaneous transluminal coronary angioplasty (PTCA), a major new heart attack treatment, on mortality. We use a full sample of administrative hospital data from Germany for the years 2005 to 2007. To account for non-random treatment assignment of PTCA, instrumental variable approaches are implemented that aim to randomize patients to different likelihoods of getting PTCA independent of heart attack severity. Instruments include differential distances to PTCA hospitals and regional PTCA rates. Our results suggest a 4.5 percentage point mortality reduction for patients who have access to this new treatment compared to patients receiving only conservative treatment. We relate mortality reduction to the additional costs for this treatment and conclude that this new treatment option is cost-effective in lowering mortality for AMI patients at reasonable cost-effectiveness thresholds.

Suggested Citation

  • Hentschker, Corinna & Wübker, Ansgar, 2016. "The impact of technology diffusion in health care markets: Evidence from heart attack treatment," Ruhr Economic Papers 632, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:632
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    References listed on IDEAS

    as
    1. Alice Sanwald & Thomas Schober, 2014. "Follow your Heart: Survival Chances and Costs after Heart Attacks - An Instrumental Variable Approach," Economics working papers 2014-12, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Douglas Almond & Joseph J. Doyle & Amanda E. Kowalski & Heidi Williams, 2010. "Estimating Marginal Returns to Medical Care: Evidence from At-risk Newborns," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 591-634.
    3. Ankit Kumar & Michael Schoenstein, 2013. "Managing Hospital Volumes: Germany and Experiences from OECD Countries," OECD Health Working Papers 64, OECD Publishing.
    4. Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From PatientMigration," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1681-1726.
    5. Okunade, Albert A. & Murthy, Vasudeva N. R., 2002. "Technology as a 'major driver' of health care costs: a cointegration analysis of the Newhouse conjecture," Journal of Health Economics, Elsevier, vol. 21(1), pages 147-159, January.
    6. repec:zbw:rwimat:077 is not listed on IDEAS
    7. Linda Ryen & Mikael Svensson, 2015. "The Willingness to Pay for a Quality Adjusted Life Year: A Review of the Empirical Literature," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1289-1301, October.
    8. Ahmed Khwaja & Gabriel Picone & Martin Salm & Justin G. Trogdon, 2011. "A comparison of treatment effects estimators using a structural model of AMI treatment choices and severity of illness information from hospital charts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(5), pages 825-853, August.
    9. Schwierz, Christoph & Wübker, Ansgar, 2009. "Determinants of Avoidable Deaths from Ischaemic Heart Diseases in East and West Germany," Ruhr Economic Papers 119, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. 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.
    11. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
    12. Budde, Rüdiger & Eilers, Lea, 2014. "Sozioökonomische Daten auf Rasterebene: Datenbeschreibung der microm-Rasterdaten," RWI Materialien 77, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    Cited by:

    1. Hentschker, Corinna, 2017. "From dusk till dawn - Are nights a dangerous time for hospital admissions?," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168056, Verein für Socialpolitik / German Economic Association.
    2. repec:gam:jecomi:v:6:y:2018:i:3:p:47-:d:164147 is not listed on IDEAS

    More about this item

    Keywords

    acute myocardial infarction; instrumental variables; mortality;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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