Technology Diffusion and Productivity Growth in Health Care

49 Pages Posted: 13 Apr 2009 Last revised: 28 Aug 2012

See all articles by Jonathan S. Skinner

Jonathan S. Skinner

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Douglas Staiger

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 2009

Abstract

Inefficiency in the U.S. health care system has often been characterized as "flat of the curve" spending providing little or no incremental value. In this paper, we draw on macroeconomic models of diffusion and productivity to better explain the empirical patterns of outcome improvements in heart attacks (acute myocardial infarction). In these models, small differences in the propensity to adopt technology can lead to wide and persistent productivity differences across countries -- or in our case, hospitals. Theoretical implications are tested using U.S. Medicare data on survival and factor inputs for 2.8 million heart attack patients during 1986-2004. We find that the speed of diffusion for highly efficient and often low-cost innovations such as beta blockers, aspirin, and primary reperfusion explain a large fraction of persistent variations in productivity, and swamp the impact of traditional factor inputs. Holding technology constant, the marginal gains from spending on heart attack treatments appear positive but quite modest. Hospitals which during the period 1994/95 to 2003/04 raised their rate of technology diffusion (the "tigers") experienced outcome gains four times the gains in hospitals with diminished rates of diffusion (the "tortoises"). Survival rates in low-diffusion hospitals lag by as much as a decade behind high-diffusion hospitals, raising the question of why some hospitals (and the physicians who work there) adopt so slowly.

Suggested Citation

Skinner, Jonathan S. and Staiger, Douglas, Technology Diffusion and Productivity Growth in Health Care (April 2009). NBER Working Paper No. w14865. Available at SSRN: https://ssrn.com/abstract=1376187

Jonathan S. Skinner (Contact Author)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States
603-646-2535 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
603-646-2535 (Phone)

Douglas Staiger

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States
603-643-2979 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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