Technological Adoption in Health Care

37 Pages Posted: 11 Jan 2010

See all articles by Pedro P. Barros

Pedro P. Barros

Universidade Nova de Lisboa

Xavier Martínez-Giralt

affiliation not provided to SSRN

Date Written: November 2009


This paper addresses the impact of payment systems on the rate of technology adoption. We present a model where technological shift is driven by demand uncertainty, increased patients' benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients' benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favors more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems.

Keywords: health care, payment systems, technology adoption

JEL Classification: I11, I12, Q33

Suggested Citation

Pita Barros, Pedro Luis and Martínez-Giralt, Xavier, Technological Adoption in Health Care (November 2009). CEPR Discussion Paper No. DP7558. Available at SSRN:

Pedro Luis Pita Barros (Contact Author)

Universidade Nova de Lisboa ( email )

Campus de Campolide
Lisboa, 1099-032
+351 21 383 3624 (Phone)
+351 21 388 6073 (Fax)


Xavier Martínez-Giralt

affiliation not provided to SSRN

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