Prospective reimbursement and the diffusion of new technologies in hospitals

Patterns of adoption of robotic radical prostatectomy in the United States and England

OBJECTIVES

To compare patterns of technological adoption of minimally invasive surgery for radical prostatectomy across the United States and England.

DATA SOURCES

We examine radical prostatectomy in the United States and England between 2005 and 2017, using de-identified administrative claims data from the OptumLabs Data Warehouse in the United States and the Hospital Episodes Statistics in England.

STUDY DESIGN

We conducted a longitudinal analysis of robotic, laparoscopic, and open surgery for radical prostatectomy. We compared the trends of adoption over time within and across countries. Next, we explored whether differential adoption patterns in the two health systems are associated with differences in volumes and patient characteristics. Finally, we explored the relationship between these adoption patterns and length of stay, 30-day readmission, and urology follow-up visits.

DATA COLLECTION

Open, laparoscopic, and robotic radical prostatectomies are identified using Office of Population Censuses and Surveys Classification of Interventions and Procedures (OPCS) codes in England and International Classification of Diseases ninth revision (ICD9), ICD10, and Current Procedural Terminology (CPT) codes in the United States.

PRINCIPAL FINDINGS

We identified 66,879 radical prostatectomies in England and 79,358 in the United States during 2005-2017. In both countries, open surgery dominates until 2009, where it is overtaken by minimally invasive surgery. The adoption of robotic surgery is faster in the United States. The adoption rates and, as a result, the observed centralization of volume, have been different across countries. In both countries, patients undergoing radical prostatectomies are older and have more comorbidities. Minimally invasive techniques show decreased length of stay and 30-day readmissions compared to open surgery. In the United States, robotic approaches were associated with lower length of stay and readmissions when compared to laparoscopic.

CONCLUSIONS

Robotic surgery has become the standard approach for radical proctectomy in the United States and England, showing decreased length of stay and in 30-day readmissions compared to open surgery. Adoption rates and specialization differ across countries, likely a product of differences in cost-containment efforts.

Impact of Guidelines on the Diffusion of Medical Technology: A Case Study of Cardiac Resynchronization Therapy in the UK

INTRODUCTION

Research on clinical practice guidelines as a determinant of the diffusion of medical technology remains sparse. We aim to evaluate the impact of guidelines on the awareness of medical technology, as a proxy of its use, with the example of cardiac resynchronization therapy (CRT) in the United Kingdom (UK).

METHODS

We measured clinician awareness based on Google searches performed for CRT that corresponded with actual CRT implant numbers provided by the European Heart Rhythm Association (EHRA). We identified the guideline recommendations published by the National Institute of Health and Care Excellence (NICE) within the UK, the European Society of Cardiology (ESC) at the European level, and the American College of Cardiology Foundation/American Heart Association in the United States (US). We specified a dynamic moving average model, with Google searches as the dependent variable and guideline changes as the independent variables.

RESULTS

One guideline change published by NICE in 2007 and two changes released by the US guidelines in 2005 and 2012 were significantly correlated with the Google searches (p = 0.08, p = 0.02, and p = 0.02, respectively). Guideline changes by the ESC had no significant impact. Changes recommending CRT in place of a conventional pacemaker, in patients with atrial fibrillation, and restricting CRT due to contraindication, remained universally uninfluential.

CONCLUSION

The factors associated with a lack of awareness (as a proxy for technology diffusion) in our case study were: a lack of strong clinical evidence that resulted in the moderate strength of a recommendation, a lack of recognition of any externally published recommendation by NICE, and the frequent release of guidelines with minor changes targeting small patient groups. At least in our case, in the absence of NICE guidelines, the US guidelines received more attention than their non-UK European counterparts, even if the former were released after the latter.

The reimbursement of new medical technologies in German inpatient care: What factors explain which hospitals receive innovation payments?

Most hospital payment systems based on diagnosis-related groups (DRGs) provide payments for newly approved technologies. In Germany, they are negotiated between individual hospitals and health insurances. The aim of our study is to assess the functioning of temporary reimbursement mechanisms. We used multilevel logistic regression to examine factors at the hospital and state levels that are associated with agreeing innovation payments. Dependent variable was whether or not a hospital had successfully negotiated innovation payments in 2013 (n = 1532). Using agreement data of the yearly budget negotiations between each German hospital and representatives of the health insurances, the study comprises all German acute hospitals and innovation payments on all diagnoses. In total, 32.9% of the hospitals successfully negotiated innovation payments in 2013. We found that the chance of receiving innovation payments increased if the hospital was located in areas with a high degree of competition and if they were large, had university status and were private for-profit entities. Our study shows an implicit self-controlled selection of hospitals receiving innovation payments. While implicitly encouraging safety of patient care, policy makers should favour a more direct and transparent process of distributing innovation payments in prospective payment systems.

Changing payment instruments and the utilisation of new medical technologies

This paper empirically investigates the impact of additional reimbursement instruments on the diffusion of new technologies in inpatient care. Using 2010-2014 German panel data on hospital level for every patient undergoing coronary angioplasty, this study examines the utilisation of drug-eluting balloon catheters (DEB) over time while additional payment instruments changed. Hypothesising that the utilisation of DEB increased abruptly when a new reimbursement instrument came into force, we estimate a fixed effects regression comparing years with a change and years where the reimbursement instrument remained the same. The model is adjusted for patient age and severity of the disease. The utilisation of DEB increased from 8407 in 2010 to 19,065 in 2014. Hospitals used significantly more DEB when an additional payment instrument changed compared to years when it remained the same. The increase was roughly twice as large. In short, hospitals are incentivised to utilise new technologies if the reimbursement changes to an instrument that is designed in a more reliable way, e.g. including less bureaucracy or guaranteeing fixed prices.

The relationship between hospital adoption and use of high technology medical imaging and in-patient mortality and length of stay

PURPOSE

The purpose of this paper is to investigate the relationship between hospital adoption and use of computed tomography (CT) scanners, and magnetic resonance imaging (MRI) machines and in-patient mortality and length of stay.

DESIGN/METHODOLOGY/APPROACH

This study used panel data (2007-2010) from 124 hospital corporations operating in Ontario, Canada. Imaging use focused on medical patients accounting for 25 percent of hospital discharges. Main outcomes were in-hospital mortality rates and average length of stay. A model for each outcome-technology combination was built, and controlled for hospital structural characteristics, market factors and patient characteristics.

FINDINGS

In 2010, 36 and 59 percent of hospitals had adopted MRI machines and CT scanners, respectively. Approximately 23.5 percent of patients received CT scans and 3.5 percent received MRI scans during the study period. Adoption of these technologies was associated with reductions of up to 1.1 percent in mortality rates and up to 4.5 percent in length of stay. The imaging use-mortality relationship was non-linear and varied by technology penetration within hospitals. For CT, imaging use reduced mortality until use reached 19 percent in hospitals with one scanner and 28 percent in hospitals with 2+ scanners. For MRI, imaging use was largely associated with decreased mortality. The use of CT scanners also increased length of stay linearly regardless of technology penetration (4.6 percent for every 10 percent increase in use). Adoption and use of MRI was not associated with length of stay.

RESEARCH LIMITATIONS/IMPLICATIONS

These results suggest that there may be some unnecessary use of imaging, particularly in small hospitals where imaging is contracted out. In larger hospitals, the results highlight the need to further investigate the use of imaging beyond certain thresholds. Independent of the rate of imaging use, the results also indicate that the presence of CT and MRI devices within a hospital benefits quality and efficiency.

ORIGINALITY/VALUE

To the authors' knowledge, this study is the first to investigate the combined effect of adoption and use of medical imaging on outcomes specific to CT scanners and MRI machines in the context of hospital in-patient care.

Cultural orientations and information systems success in public and private hostitals: preliminary evidences from Italy

Background

The effective adoption and use of digital and computerized systems and records in hospitals are crucial for increasing the overall quality, safety and outcomes of any national health community. Prior research found that hospitals’ dominant cultural orientation affects the adoption of new technology. However, the organizational culture of hospitals can greatly vary between public and private hospitals. Thus, the ownership type of the hospital is likely to affect, to some extent, the aforementioned relationship between culture and information system success. The present article focuses in detail on this issue and attempts to answer the following research question: which cultural orientations are promoting information system success in public and private hospitals?

Methods

The authors develop and test two hypotheses about this relationship via two regression approaches (single-level and multi-level). The authors collected data from 172 respondents—clinicians and non-clinicians—working in two (one public and one private) hospitals in Campania, one of the largest regions in Italy.

Results

The findings of this study show clear differences between private and public hospitals. First, a dominant cultural orientation that emphasizes flexibility values (clan and adhocracy cultures) positively influences information systems success in terms of individual impact. Second, the influence of a clan orientation on individual impact is stronger in the public hospital. Third, the influence of an adhocracy orientation is stronger in the private hospital. Overall, the type of ownership—either public or private—of these healthcare organizations affects the link between cultural orientations and IS success.

Conclusion

Managers of private hospitals should offer to their employees the opportunity to adopt and implement new information systems processes driven by openness towards the external environment in order to benchmark and learn from what was done previously in other organizations. Managers of public hospitals should set up human resource management practices, knowledge creation mechanisms, and internal communication capable of generating a friendly learning environment for their employees when adopting new technology.

Adoption of high technology medical imaging and hospital quality and efficiency: Towards a conceptual framework

Measuring the value of medical imaging is challenging, in part, due to the lack of conceptual frameworks underlying potential mechanisms where value may be assessed. To address this gap, this article proposes a framework that builds on the large body of literature on quality of hospital care and the classic structure-process-outcome paradigm. The framework was also informed by the literature on adoption of technological innovations and introduces 2 distinct though related aspects of imaging technology not previously addressed specifically in the literature on quality of hospital care: adoption (a structural hospital characteristic) and use (an attribute of the process of care). The framework hypothesizes a 2-part causality where adoption is proposed to be a central, linking factor between hospital structural characteristics, market factors, and hospital outcomes (ie, quality and efficiency). The first part indicates that hospital structural characteristics and market factors influence or facilitate the adoption of high technology medical imaging within an institution. The presence of this technology, in turn, is hypothesized to improve the ability of the hospital to deliver high quality and efficient care. The second part describes this ability throughout 3 main mechanisms pointing to the importance of imaging use on patients, to the presence of staff and qualified care providers, and to some elements of organizational capacity capturing an enhanced clinical environment. The framework has the potential to assist empirical investigations of the value of adoption and use of medical imaging, and to advance understanding of the mechanisms that produce quality and efficiency in hospitals.

Endogenous Technology Adoption and Medical Costs

Despite the claim that technology has been one of the most important drivers of healthcare spending growth over the past decades, technology variables are rarely introduced explicitly in cost equations. Furthermore, technology is often considered exogenous. Using 1996-2007 panel data on Swiss geographical areas, we assessed the impact of technology availability on per capita healthcare spending covered by basic health insurance whilst controlling for the endogeneity of health technology availability variables. Our results suggest that medical research, patent intensity and the density of employees working in the medical device industry are influential factors for the adoption of technology and can be used as instruments for technology availability variables in the cost equation. These results are similar to previous findings: CT and PET scanner adoption is associated with increased healthcare spending, whilst increased availability of percutaneous transluminal coronary angioplasty facilities is associated with reductions in per capita spending. However, our results suggest that the magnitude of these relationships is much greater in absolute value than that suggested by previous studies that did not control for the possible endogeneity of the availability of technologies. Copyright © 2016 John Wiley & Sons, Ltd.

The Adoption of Innovations by Provider Organizations in Health Care

Innovations in health care account for some of the most dramatic improvements in population health outcomes in the developed world as well as for a nontrivial proportion of growth in expenditures. Provider organizations are the adopters of many of these innovations, and understanding the factors that inhibit or facilitate their diffusion to and possible disengagement from these organizations is important in addressing cost, quality, and access issues. Given the importance of these issues, the purpose of this article is to (1) create a comprehensive census of studies examining the adoption of and disengagement from innovations in health care provider organizations; (2) organize these studies into an inductively derived classification scheme; (3) assess the studies' strengths and weaknesses; and (4) reflect on the implications of our review for future research.

Medical Equipment Adoption in Greek Hospitals: The Case of CT Scanners

The paper aims to unravel the elements which constitute the decision-making process concerning new medical technologies in the context of the Greek Health System, where there are more than one decision makers. Computerized tomography is used as a case study. Using a unique data setting that refers to the total number of the Greek Public Hospitals, the pattern of adoption is outlined. At the second stage, data is associated with regional and geographical characteristics as well as information related to the hospital efficiency. A probit model is used for the factor analysis and a survival function hazard model for time to adopt. Results indicate that the models used are suitable for examining the factors influencing the adoption of medical technologies as well as the time that such technologies are adopted. It was found that the size of the hospital and its plenitude positively influence not only the probability of adoption but also the time of adoption of computerized tomography. Findings are encouraging; they support the use of the model in studying the adoption of other medical technologies too and can be used also as a tool by policy makers to assist the process of investment in new health technologies.

Technology diffusion and substitution of medical innovations

PURPOSE

The aim of this paper is to examine the diffusion of a new surgical procedure with lower per-case cost and how its diffusion path is affected by the simultaneous introduction of a new drug class that may be an effective treatment to prevent surgery. In particular, we examine whether a process of technology substitution exists that influences the diffusion process of the surgical technology. Given their different cost implications, the interaction of these two different technologies, surgery and drug intervention, is relevant from the perspective of health expenditure. This is of particular interest in health care as technology adoption and diffusion has been cited as a major driver of expenditure growth. Such expenditure growth has been increasingly targeted through the use of market-orientated policy tools aimed at increasing efficiency. Our research is thus addressing the question of how economic incentives influence the diffusion process and we discuss the impact of a set of incentives on hospital behavior.

DESIGN/METHODOLOGY

Hospital admission data for the financial years 1998/1999 to 2007/2008 in England are used to empirically test the contribution of prescription uptake and market-oriented reforms. Dynamic panel data models are used to capture any changes in technology preference during the period of study.

FINDINGS

Our results suggest that the hospital sector exhibits a strong new technology preference, tempered by the interaction of competition for patients and the ability of the primary care sector to substitute treatments.

VALUE/ORIGINALITY

Given the current fast technological change, we examine the technological race occurring in the health care sector. We account simultaneously for the diffusion of different technologies not only within the same typology but also with technologies of a different class.

DRG-based hospital payment systems and technological innovation in 12 European countries

OBJECTIVES

To assess how diagnosis-related group-based (DRG-based) hospital payment systems in 12 European countries participating in the EuroDRG project pay and incorporate technological innovation.

METHODS

A standardized questionnaire was used to guide comprehensive DRG system descriptions. Researchers from each country reviewed relevant materials to complete the questionnaire and drafted standardized country reports. Two characteristics of DRG-based hospital payment systems were identified as particularly important: the existence of short-term payment instruments encouraging technological innovation in different countries, and the characteristics of long-term updating mechanisms that assure technological innovation is ultimately incorporated into DRG-based hospital payment systems.

RESULTS

Short-term payment instruments and long-term updating mechanisms differ greatly among the 12 European countries included in this study. Some countries operate generous short-term payment instruments that provide additional payments to hospitals for making use of technological innovation (e.g., France). Other countries update their DRG-based hospital payment systems very frequently and use more recent data for updates.

CONCLUSIONS

Generous short-term payment instruments to promote technological innovation should be applied carefully as they may imply rapidly increasing health-care expenditures. In general, they should be granted only if rigorous analyses have demonstrated their benefits. If the evidence remains uncertain, coverage with evidence development frameworks or frequent updates of the DRG-based hospital systems may provide policy alternatives. Once the data and evidence base is substantially improved, future research should empirically investigate how different policy arrangements affect the adoption and use of technological innovation and health-care expenditures.

The adoption of hospital information systems

This paper empirically examines the diffusion of hospital information systems (ISs), specifically, pharmacy, laboratory, and radiology systems. Given the policy significance of health IS and the widespread perception that it's diffusion is slow, a better understanding of the mechanisms driving IS adoption is needed. A novel data set incorporating both IS adoption and hospital characteristics was constructed. These data follow the behavior of 1965 hospitals for the years 1990-2000. Hypotheses pertaining to hospital characteristics, hospital competition, and strategic behavior are tested utilizing proportional hazard models. I find that IS adoption is related to multi-hospital system membership, payer mix, and hospital scale. The role of scale, however, significantly diminishes throughout the time period, likely reflecting improved personal computer performance and improved IT scalability. Conversely, I find little that strategic behavior or hospital competition affects IS adoption. Likewise, hospital ownership does not affect the adoption of these systems. Overall, these results suggest that hospital IS diffusion has not been normatively slow.

Determinants of the diffusion of computed tomography and magnetic resonance imaging

OBJECTIVES

The aim of this study is to explain factors influential to the diffusion of computed tomography (CTs) and magnetic resonance imaging (MRIs).

METHODS

Variables were identified from a review of the literature on the diffusion of health technologies. A formal process was applied to build a conceptual model of the mechanism that drives technology diffusion. Variables for the analysis were classified as predisposing, enabling, or reinforcing factors, in keeping with a model commonly used to explain the diffusion of health behaviors. Multiple regression analysis was conducted using year 2000 OECD data.

RESULTS

The results of this study showed that total health expenditure per capita (p < .01, both CTs and MRIs) and flexible payment methods to hospitals (p < .05, both CTs and MRIs) were significantly associated with the diffusion of CTs and MRIs (adjusted R2 = 0.477, 0.656, respectively).

CONCLUSIONS

This study presents a systematically developed model of the mechanism governing technology diffusion. Important findings from the study show that purchasing power, represented by total health expenditure per capita and economic incentives to hospitals in the form of flexible payment methods, were positively correlated with diffusion. Another important achievement of our model is that it accounts for all thirty OECD member countries without excluding any as outliers. This study shows that variation across countries in the diffusion of medical technology can be explained well by a logical model with multiple variables, the results of which hold profound implications for health policy regarding the adoption of innovations.

Managed care and technology adoption in health care: evidence from magnetic resonance imaging

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 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.

Consumer information, price, and nonprice competition among hospitals

The results of the empirical analysis in this paper indicate that broadly defined hospital quality declines in more concentrated markets. The direction of the effect of concentration on hospital charges is smaller and the direction is less clear. Prices are little, if any, lower in more concentrated markets. Hospital price-cost margins are higher in more concentrated markets. Higher concentration discourages price competition. The data do not support the increasing monopoly theory. Further, since hospital price-cost margins do not appear to remain constant, we must reject the redundant resources theory as well, though its stress on nonprice competition rings true. The empirical results are consistent with the traditional antitrust theory. In addition, consumer information plays a surprisingly important role. Consumer information is important in explaining hospital prices, and less important in hospital quality. Consumers are not passive; they do play a role in hospital choice. It is likely that more recent innovations in health insurance will increase consumer awareness. With an increase in consumer copayments, and more active insurer contracting, it is likely that future hospital competition is more likely to stress price, and future antitrust activity could lead to price reductions in addition to declining hospital price-cost margins.

Costs for acute myocardial infarction in a tertiary care centre and nationwide in France

OBJECTIVE

We compared the estimated costs of coronary interventions from our hospital's cost accounting system with data from the French Diagnosis Related Group (DRG) cost database, taking the perspective of our hospital.

DESIGN

Cost data on hospital resources used by patients hospitalised for acute myocardial infarction (MI), with and without complications, including deceased patients, were collected in a tertiary care university hospital located in Paris, France. The data were collected using the hospital's cost accounting system and then compared with the estimates provided by the DRG reimbursement schedule for similar conditions.

MAIN OUTCOME MEASURES AND RESULTS

The estimated costs were 849 euro (EUR) for coronary angiography, EUR4762 for coronary angioplasty with stenting, and EUR4978 to 8067 for MI. The DRG reimbursement schedule provided for acute MI was EUR3920 to 5709.

CONCLUSIONS

Although the current cost of treating acute MI in a teaching hospital is reasonably close to that in the current reimbursement schedule, rapid technological changes regarding both drugs and devices renders necessary a close monitoring of costs associated with the management of these acute care patients.

The composition of rural hospital medical staffs: the influence of hospital neighbors

The local supply of physicians has a strong influence on the availability and the quality of services provided by rural hospitals. Nevertheless, there are no published studies that describe the composition of rural hospital medical staffs and, in particular, the availability of specialists on these staffs. This study uses 1991 and 1994 survey data from rural hospitals located in eight states to describe the specialty composition and factors that influence the presence of specialists on rural hospital medical staffs. The results show a strong, positive association between the level of medical staff specialization in rural hospitals and the level of medical specialization of their closet rural neighbors, which suggests there is competition among rural hospitals based on the composition of the hospital medical staff. Analysis by specialty type, however, indicates that the degree of competition may differ for different types of specialists.

Telemedicine for patient consultation: factors affecting use by rural primary-care physicians in Kansas

The purpose of our study was to investigate knowledge of, attitudes to, and use of interactive telemedicine for specialist consultation among rural practitioners Kansas. We interviewed 28 rural primary-care practitioners at seven remote health-care facilities in six locations. Content analyses of the interviews showed universal but superficial knowledge of telemedicine, appreciation of the value of the technology, but relatively low usage of the telemedicine service available (32% of subjects). Physicians did not appear to be afraid of change. Telemedicine usage was not related to the professional characteristics of the physicians. Our findings suggest that further growth in the use of telemedicine will depend on efforts directed towards physicians which are aimed at creating a more user-friendly environment and at accommodating the referral practices of potential users.

Competition, ownership, and access to hospital services. Evidence from psychiatric hospitals

OBJECTIVES

This article examines the impact of increasing competition among hospitals on access to inpatient services and preexisting differences in access between nonprofit and for-profit facilities. It tests theoretical propositions that suggest that nonprofit and for-profit hospitals will respond in different ways and to differing degrees to changing competitive pressures.

METHODS

Drawing data from a 1987-88 national survey of psychiatric hospitals, the authors measured access in terms of the availability of different types of services and the provision of uncompensated care. The impact of hospital ownership, competition as well as the interaction of ownership and competition was assessed through a set of regression models, controlling for other characteristics of the hospital markets and local service system.

RESULTS

Nonprofit psychiatric hospitals provide greater access than their for-profit counterparts under conditions of limited competition. Increased competition reduces the ownership-related differences in uncompensated care, but increases the differences for marginally profitable services. The market share of for-profit hospitals had an independent negative effect on access, holding constant the intensity of competition.

CONCLUSIONS

The interaction of ownership and competition explains some seemingly inconsistent finding in the literature and points to the complexity of relying on ownership-based policies to protect access in an increasingly competitive health-care system.

The effect of fixed payment on hospital costs

New Medicare regulations have replaced the cost-based system of reimbursement of capital expenditures by hospitals with a fixed payment per case based on assigned diagnostic-related groups. For the first time, hospitals must pay the governmental share of their capital costs. At the same time, overall reform points toward more capitation or fixed payments from all payers. This article discusses possible responses to legislative and competitive reforms by hospital management and the resulting effectiveness of the changes. To identify the potential effect of capital payment reform, we highlight some of the key provisions and assumptions of the new regulations, discuss the management implications of a changed capital payment system, and explore alternative models of hospital investment behavior in a world where one price for services for all buyers is a probable scenario.

Evaluation of health technology: economic issues for health policy and policy issues for economic appraisal

Economic evaluations of health care programmes and treatments have now been conducted for about 30 years. A number of key methodological principles have been specified and there has been an exponential rise in the number of published studies. However, there is relatively little evidence of the use of these studies in decision making about health technologies. Therefore, this paper considers what policy issues are amenable to economic analysis, or could be greatly informed by economic appraisal results. It is concluded that a wide range of mechanisms exist to influence the diffusion and use of health technologies and that economic appraisal is potentially applicable to a number of them. The paper also considers how economic appraisal could be made more relevant to decision making. It is concluded that methodological standards need to be maintained, that evidence needs to be produced in a timely fashion, that the local validity of study results needs to be increased, that the dissemination of study results needs to be improved and that more note needs to be taken of the available policy instruments.

Innovation under federal health care reform

Health care reform, which seeks to expand coverage and control spending, contains mixed messages for innovators. Policies that advance reform goals are likely to shift resources away from hospitals, specialists, and expensive procedures and toward areas such as prevention and primary care where innovation may yield greater health improvements per dollar spent. The size of these effects depends critically on the extent of cost containment achieved. Constraining spending will be politically difficult because it requires that consumers forego some possible health benefits in return for lower costs. In a climate of cost containment, systematic evaluation of new technology is vital to identify and expand coverage to worthwhile innovations and to assure a fair hearing for innovators.

Technological diffusion in primary health care

The paper contains a theoretical and empirical analysis of the driving forces behind the diffusion of dry chemical laboratory equipment in Norwegian primary health care. The empirical analysis is embedded in a theoretical model of a dynamic investment problem focusing on heterogeneity in the potential adopters' profit functions. The empirical analysis indicates that most adopters are too late in adopting the new technology. A logit analysis of the diffusion process lends some support to the notion that profit function heterogeneity influences the diffusion process. An offspin of the empirical analysis is information on the reimbursement system, indicating that this system does not promote efficient resource allocation in the sector.

Time to adoption of an innovation by dentists in private practice: sealant utilization

Dentists can be divided into five adoption categories based upon their time of adoption of pit and fissure sealants: innovators, early adopters, early majority, late majority, and laggards. The differences among dentists in the five adoption categories were examined for four classes of variables: practice characteristics, dentist characteristics, communication of information, and practice environment. Questionnaires were mailed in September 1984 to a random sample (N = 521) of Washington State dentists in general practices. A total of 376 completed questionnaires were returned, for a response rate of 72 percent. Adoption of sealants proceeded as follows: 5 percent of dentists through 1973, 24 percent through 1979, 50 percent through 1982, and 75 percent through 1984. Adoption category was related to percent of assistants who were certified, delegation to assistants and hygienists, magnitude of the fees charged by the practice, number of staff meetings per month, the dentist having been an officer in a dental organization, year the dentist adopted other new technologies, dentist's self-rating of willingness to try new things, percent of patients who are children, and percent of the dentist's colleagues who used sealants. These data lend some support to the two-stage or opinion-leader model of diffusion and suggest that new technologies can be promoted by first influencing dentists who consistently adopt early.

Substitutability of a process innovation in medical diagnosis: some empirical results

The health sectors in many countries have been increasing in relative size, and medical innovations have been identified by some as a factor contributing to the rise in health expenditures. This paper begins by reviewing the various approaches that economists have employed to determine the connection, if any, between rising health expenditures and new medical technologies. It is then argued that another way to approach the issue is to determine if innovations have substituted for previously existing technologies. Thus this method cannot be applied to product innovations: it is restricted to process innovations. This procedure is applied to the innovation of fibre optic colonoscopy, a procedure for diagnosing diseases/conditions in the lower gastrointestinal tract. The data relate to private medical practice in Australia which operates on a fee-for-service basis. The empirical results indicate no evidence of substitution of the 'new' for the 'old' technology. Thus, there is some reason to believe that this innovation will have contributed to rising health expenditures for diagnosis of the lower gastrointestinal tract. The paper concludes by considering policy options that could address the issue.

Innovation and diffusion of health-related technologies. A conceptual framework

The development and diffusion of health-related technologies constitute an extremely complex process. This article examines the phenomenon of technological innovation; discusses the factors determining the diffusion of high, medium, and low technologies; and suggests strategies for controlling the diffusion of these technologies. A research program is also proposed that should improve our understanding of the process of development and diffusion of health-related technologies.

Medical technology in the United States. The last decade

This paper reviews the evolution of U.S. policy toward medical technology in areas such as cost containment, regulation of devices and drugs, and third party reimbursement. In addition the authors chronicle the diffusion of major medical technologies, procedures, and organizational innovations in the United States. Finally, the article provides tentative observations on the effect of recent policy changes and concludes with some recommendations for the future.

Medical technology and its diffusion in Australia

The author examines the Australian health care system by surveying the financing techniques, physical organization, and government activity. He explains the impact of the public and private sectors and comments on the effectiveness of current evaluation procedures. While the author believes that the system is relatively healthy and cost effective, he recognizes a need for more comprehensive and scientific oversight. Using regression analysis and focusing on the installation of medical technology in hospitals, the author attempts to determine the specific factors that influence technology diffusion. He concludes by stressing that further studies analyzing the actual use of specific technologies are vital.

Market and regulatory influences on the availability of coronary angioplasty and bypass surgery in U.S. hospitals

Using 1983 data on 3720 nonfederal short-term hospitals, we analyzed the influence of local market competition and state regulatory programs on the availability of percutaneous transluminal coronary angioplasty and coronary-artery bypass surgery. The degree of competition for patients with heart disease was measured in terms of the number of hospitals in the local market area that maintained a cardiac catheterization laboratory or facility for open-heart surgery. When the patient case mix and the hospital's teaching role were controlled for, institutions with more than 20 competitors in the local area were 166 percent more likely to offer coronary angioplasty (P less than 0.0001) and 147 percent more likely to offer bypass surgery (P less than 0.0001) than hospitals with no competitors in the local market. Four fifths of the hospitals performing bypass surgery whose annual volume was less than 200 had one or more neighboring hospitals with a facility for open-heart surgery. State rate-regulation programs in New York, New Jersey, Connecticut, Massachusetts, and Maryland significantly reduced the availability of both procedures, with the greatest regulatory effects being observed in the most competitive hospital markets. We conclude that in the period under consideration, competition encouraged and regulation discouraged the proliferation of these cardiac services.

Economic evaluation and the rational diffusion and use of health technology

In principle, economic evaluation provides a suitable framework for the assessment of the costs and benefits of health technologies. However, despite a rapid growth in the publication of cost-effectiveness and cost-benefit analysis in health care, there is little evidence that economic evaluation has yet become part of an integrated approach to technology assessment. This paper, based on the findings of a European Community project on economic appraisal of health technology, discusses how the design and conduct of economic evaluations can be improved so as to increase their relevance to health care decision making, and how policies on the diffusion and use of health technology can be devised so as to make fuller use of the economic evaluations that are carried out.

Economic forces and hospital technology. Lessons from the United States experience

This paper considers economic forces on the organization and use of technology in hospitals from a U.S. perspective. U.S. hospitals are moving from a period of very loose financial constraints to one in which the demand side of the market is likely to exert much greater discipline. Theory and limited evidence suggest some important effects on the adoption and use of technology, leading in general to more emphasis on cost reduction and less emphasis on costly quality improvements. Also discussed are economic influences on the movement of technology out of the hospital and on the development of new technologies. Finally, some peculiarities of very high cost technologies are noted.

The diffusion and use of diagnostic imaging equipment in France. The limits of regulation

The paper presents a French national survey on diagnostic imaging equipment and activity showing that conventional x-ray radiology still dominates and that the rate of diffusion of technological innovations has been very different, being slower than in other industrialized countries for such technologies as CT scanners, nuclear medicine, and magnetic resonance imaging, but on the other hand, very quick for ultrasound and digital angiography. The variety of regulations for this equipment, although it plays an important role, is not sufficient to explain these differences in the rate of diffusion. The paper shows that other explanatory variables must be taken into account, at least in the French context: the situation of the domestic biomedical industry, the relations between private and public sectors of health care delivery, and even the "technical" culture and tradition of French radiologists.

Economic forces and hospital technology. A perspective from Europe

The paper considers the economic characteristics of technology and suggests a categorization based on the economic nature of particular technologies and their effect on the product health care that may be helpful in considering the economics of technology in hospitals. It reviews the range of economic forces that might be expected to apply to the use of technology in the hospital setting, and notes some of the evidence to support such hypotheses. In considering the limited evidence from the United Kingdom and elsewhere in Europe, the paper contrasts its focus on socio-political, institutional, and organizational factors, rather than the direct economic factors considered in the United States work. It suggests that the multiplicity of forces at work make cross-national, empirical, and policy analyses very difficult. Indeed, without more economic appraisal the effect of differences in technology adoption cannot be evaluated.

Medical technology and health expenditure: an economic review and a proposal

This paper is an evaluative survey of the economic literature on the relationship between technology and/or innovation and health expenditures. Various types of analysis viz. econometric modelling; three residual approaches; the cost-of-illness approach; and the literature on supplier interests are contrasted, and the results presented. The paper concludes with a discussion of the policy and planning implications, and a simple, and conventional, proposal is made that could unambiguously determine this relationship in the case of process innovations.

Diffusion of surgical technology. An exploratory study

The study presents an empirical analysis of the diffusion patterns of five surgical procedures. Roles of payer mix, regulatory policies, physician diffusion, competition among hospitals, and various hospital characteristics such as size and the spread of technologies are examined. The principal data base is a time series cross-section of 521 hospitals based on discharge abstracts sent to the Commission on Professional and Hospital Activities. Results on the whole are consistent with a framework used to study innovations in other contexts in which the decisions of whether to innovate and timing depend on anticipated streams of returns and cost. Innovation tends to be more likely to occur in markets in which the more generous payers predominate. But the marginal effects of payer mix are small compared to effects of location and hospital characteristics, such as size and teaching status. Hospital rate-setting sometimes retarded diffusion. Certificate of need programs did not.

The diffusion of innovations in hospitals. Some econometric considerations

Empirical studies of the diffusion of innovations have not addressed adequately econometric problems that are characteristic of such analyses. Reanalysis of data for five innovations using an estimator with desirable statistical properties results in a considerably revised estimate of the impact of prospective reimbursement on diffusion.

A qualitative assessment of the Medicare prospective payment system

This paper employs commonly accepted criteria to evaluate the potential outcomes of the Medicare pricing mechanism. The analysis suggests that the recent revisions in the Medicare payment system have less potential to contain increases in total hospital costs than those embodied in all-payer systems. In addition, this paper also suggests that the pricing mechanism will jeopardize the financial viability of many hospitals while exacerbating inequities that emanate from differential pricing policies. Finally, when viewed from the perspective of insured beneficiaries, it is reasonable to expect that the payment mechanism will reduce not only access to inpatient care but also the use of service once admitted.