The diffusion of innovations in hospitals. Some econometric considerations

Explaining the adoption and use of computed tomography and magnetic resonance image technologies in public hospitals

Objective

This article examines what the adoption and use of advanced medical technologies – computed tomography (CT) and magnetic resonance imaging (MRI) – by public hospitals depend on and to what extent.

Methods

From a sample of panel data for all public hospitals in the health service of Galicia (a subregion of the Galicia-North of Portugal Euroregion) for the 2010–2017 period, we grouped explanatory variables into inputs (resources), outputs (activities) and socio-demographic variables. Factor analysis was used to reduce as much as possible the number of analysed variables, discriminant analysis to examine the technologies adoption decision, and multiple regression analysis to investigate their use.

Results

Factor analysis identified motivators on adoption and use of CT and MRI medical technologies as follows: hospital inputs/outputs (Factor 1); radiology studies and adoption of CT by public hospitals (Factor 2); research/teaching role and big-ticket diagnostic and therapeutic (lithotripsy) technologies (Factor 3); number of transplants (Factor 4); cancer diagnosis/treatment (Factor 5); and catchment area geographical dispersion (Factor 6). Cronbach’s alpha of 0.881 indicated an acceptable degree of reliability of the factor variables. Regarding adoption of these technologies, Factor 1 is the most influential, explaining 37% of the variance and showing adequate global internal consistency, whereas Factor 2 is limited to 13% of the variance. In the discriminant analysis, values for Box’s M test and canonical correlations such as Wilks’s lambda for the two technologies underpin the reliability and predictive capacity of the discriminant equations. Finally, and according to the regression analysis, the factor with the greatest influence on CT and MRI use is Factor 2, followed by Factors 1 and 3 in the case of CT use, and Factors 3 and 5 in the case of MRI use.

Conclusion

CT and MRI adoption by public hospitals is mainly determined by hospital inputs and outputs. However, the use of both medical technologies is mainly influenced by conventional radiology studies and CT adoption. These results suggest that both choices – adoption and use of advanced medical technology – may be separate decisions as they are taken possibly by different people (the former by managers and policymakers and the latter by physicians).

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.

Why hospitals adopt patient engagement functionalities at different speeds? A moderated trend analysis

OBJECTIVE

To investigate acute care hospitals' adoption speed of patient engagement health information technology (HIT) functionalities from 2008 to 2013 and how this speed is contingent on environmental factors and hospital characteristics.

METHODS

Data on non-government acute care hospitals located in the United States was obtained from merging three databases: the American Hospital Association's (AHA) annual survey information technology supplement, AHA annual survey, and the Area Health Resource File (AHRF). The variables obtained from these datasets were the amount of annually adopted patient engagement HIT functionalities and environmental and organizational characteristics. Environmental factors included were uncertainty, munificence, and complexity. Hospital characteristics included size, system membership, ownership, and teaching status.

RESULTS

A regression analysis of 4176 hospital-year observations revealed a positive trend in the adoption of HIT functionalities for patient engagement (β= 1.109, p < 0.05). Moreover, the study showed that large, system-affiliated, not-for-profit, teaching hospitals adopt patient engagement HIT functionalities at a faster speed than their counterparts. Environmental munificence and uncertainty were also associated with an accelerating speed of adoption. Environmental complexity however did not show a significant impact on the speed of adoption.

DISCUSSION

From 2008 to 2013, there was a significant acceleration in the speed of adopting patient engagement HIT functionalities. Further efforts should be made to ensure proper adoption and consistent use by patients in order to reap the benefits of these IT investments.

CONCLUSION

Hospitals adopted at least one HIT functionality for patient engagement per year. The adoption speed varied across hospitals, depending on both environmental and organizational factors.

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.

Adoption of hospital case management: economic and institutional influences

Case management became prevalent in US hospitals in the 1990s and is believed to be beneficial in controlling resource utilization, improving quality of care, reducing variation of care processes and enhancing both patient and staff satisfaction. This research investigates the adoption of case management by US hospitals at three time periods: 1994, 1997, and 2000. We propose that both economic and institutional factors influence the adoption of this management innovation, with economic factors being more influential in early and mid-periods (1994-1997) and institutional factors being more influential in later periods (after 1997). Using American Hospital Association Annual Survey Data and community data from the Area Resources File, we assess the relationship of baseline (1994) hospital and market characteristics to the likelihood of early adoption compared to late adoption, and mid-adoption compared to late adoption. We confirm that both economic and institutional forces influence the likelihood of early and mid-period adoption of case management compared to late adoption. We conclude that institutional influences aimed at achieving or maintaining legitimacy may be as strong a motivator for hospitals to adopt case management as are economic incentives. Implications for practice and further research are discussed.

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.

Innovation in nursing homes: which facilities are the early adopters?

PURPOSE

This study examined organizational and market factors associated with nursing homes that are most likely to be early adopters of innovations. Early adopter institutions, defined as the first 20% of facilities to adopt an innovation, are important because they subsequently facilitate the diffusion of innovations to others in the industry.

DESIGN AND METHODS

Two groups of innovations were examined, special care units and subacute care services. I used discrete-time logistic regression analysis and nationally representative data from 13,162 facilities at risk of being early adopters of innovations during twelve 6-month intervals from 1992 to 1997.

RESULTS

Organizational factors that increase the likelihood of early innovation adoption are larger bed size, chain membership, and high levels of private-pay residents. Four market factors that increase the likelihood of early innovation adoption are: a retrospective Medicaid reimbursement methodology, a more competitive environment, higher average income in the county, and a higher number of hospital beds in the county.

IMPLICATIONS

This analysis shows that organizational and market characteristics of nursing homes affect their propensity toward early adoption of innovations. Some of the results may be useful for nursing home administrators and policy makers attempting to promote innovation.

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.

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.

Specialist and generalist physicians' adoption of antibiotic therapy to eradicate Helicobacter pylori infection

OBJECTIVES

The authors examine how specialist and generalist physicians adapted their practice patterns to emerging information on the role of Helicobacter pylori in peptic ulcer disease (PUD).

METHODS

Data were collected via a mail survey sent to national random samples of gastroenterologists, family practitioners, and general internists in April 1994. A Cox proportional hazards regression was used to evaluate the determinants of the timing of adoption of antibiotic therapy for suspected or confirmed PUD.

RESULTS

Most respondents (99.1% of specialists and 64.6% of generalists) had prescribed antibiotic therapy to eradicate Helicobacter pylori at least once. The median specialist adopted 21 months before the medical generalist. Timing of adoption also was related to gender, board certification, PUD case load, and practice setting.

CONCLUSIONS

Gastroenterologists were more likely than primary care physicians to adopt antibiotic therapy for PUD, even before the evidence of this therapy's effectiveness was conclusive. Primary care physicians remained less likely to adopt after efficacy was established. The slower adoption by primary care physicians appeared to be related both to having less information than specialists about the new therapy and to more conservative practice styles. Measures to facilitate the flow of information about new technologies to primary care physicians may be warranted. Research on interspecialty differences in adoption of new therapies can contribute to understanding the consequences of the current shift from specialist- to generalist-driven care.

Technology and staffing in Japanese university hospitals. Government versus private

We examined staffing levels, acquisition of medical technologies, and utilization of those technologies in private and government teaching hospitals in Japan. Adjusting for size and case mix, we found that government hospitals acquire more technology, use that technology less, and employ a more highly skilled staff than do private hospitals.

Quality competition in local hospital markets: some econometric evidence from the period 1982-1988

This study examines whether American hospitals continued to engage in non-price or quality competition over the recent past as health care markets underwent fundamental structural changes and the economic incentives facing hospital managers were correspondingly altered. It also investigates the degree to which such rivalrous behavior contributes to losses in economic welfare. An econometric model of quality competition is specified that tests, among other things, for the effect of spending by the hospital to enhance the quality of output on annual changes in its share of the local (inpatient) market as well as the effects of competitive conditions in the local market on the annual sum spent on quality enhancement. The model is estimated with panel data on 195 acute care hospitals in the State of Florida for the years 1982-1988. The results suggest that quality competitive behavior continued unabated over this period and that it was stimulated as much by the growth in physician supply and alternative delivery mechanisms as it was by other competing hospitals in the local market. Furthermore, the results show that quality competition yields some inefficiency or waste, but much of it also meets the test of the market.

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.