Technological Development and Medical Productivity: The Diffusion of Angioplasty in New York State

49 Pages Posted: 7 Nov 2002 Last revised: 27 Jun 2012

See all articles by David M. Cutler

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Robert S. Huckman

Harvard Business School; National Bureau of Economic Research (NBER)

Date Written: November 2002

Abstract

A puzzling feature of many medical innovations is that they simultaneously appear to reduce unit costs and increase total costs. We consider this phenomenon by examining the diffusion of percutaneous transluminal coronary angioplasty (PTCA) -- a treatment for coronary artery disease -- over the past two decades. We find that growth in the use of PTCA led to higher total costs despite its lower unit cost. Over the two decades following PTCA's introduction, however, we find that the magnitude of this increase was reduced by between 10% and 20% due to the substitution of PTCA for CABG. In addition, the increased use of PTCA appears to be a productivity improvement. PTCAs that substitute for CABG cost less and have the same or better outcomes, while PTCAs that replace medical management appear to improve health by enough to justify the cost.

Suggested Citation

Cutler, David M. and Huckman, Robert S., Technological Development and Medical Productivity: The Diffusion of Angioplasty in New York State (November 2002). NBER Working Paper No. w9311. Available at SSRN: https://ssrn.com/abstract=347083

David M. Cutler (Contact Author)

Harvard University - Department of Economics ( email )

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Robert S. Huckman

Harvard Business School ( email )

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National Bureau of Economic Research (NBER)

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