Essays on health economics and technology adoption

Abstract

This thesis studies the economics of technology adoption in the healthcare industry. The first chapter analyzes the impact of health information technology (HIT) on the quality and intensity of care delivered to Medicare inpatients. Building an organizational model, I show how the adoption of HIT may improve patient health and may either increase or decrease medical expenditures. Using Medicare claims data from 1998-2005, I estimate the effects of HIT by exploiting variation in hospitals' adoption statuses over time, analyzing 2.5 million inpatient admissions across 3900 hospitals. HIT is associated with an initial 1.3% increase in billed charges. Additionally, HIT adoption appears to have little impact on the quality of care, measured by patient mortality, medical complication rates, adverse drug events, and readmission rates. These results are robust to the addition of rich controls for pre-trends. The findings suggest that HIT is not associated with improvements in either the efficiency or quality of hospital care for Medicare patients, through five years after adoption. In the second chapter, I investigate the scope for physician learning about the value and applications of new medical technologies across geographic regions. In particular, I analyze the diffusion of positron emission tomography and deep brain stimulation, using data on Medicare claims from 1998-2005. The mix of patient diagnoses treated with the new technologies changes substantially during the early stages of diffusion. Moreover, states that are late to adopt these technologies do not repeat the process of experimental learning undertaken by early adopters to discover which patients should receive the new treatment In the third chapter, I analyze several policy initiatives that aim to manage the usage of medical technologies and discuss key determinants of technology adoption that may be fruitful targets for future research and policy intervention. Effective technology policy must balance cost, control with a recognition that new medical technologies have been associated with tremendous health and longevity gains. I find that existing Medicare coverage determinations and state certificate of need programs appear to have little influence on actual resource utilization, in part driven by lack of enforcement of existing policies.