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Review of Industrial Organization

, Volume 53, Issue 1, pp 81–115 | Cite as

The Role of Hospital and Market Characteristics in Invasive Cardiac Service Diffusion

  • Jill R. Horwitz
  • Charleen Hsuan
  • Austin Nichols
Article

Abstract

Little is known about how the adoption and diffusion of medical innovation is related to and influenced by market characteristics such as competition. The particular complications that are involved in investigating these relationships in the health care sector may explain the dearth of research. We examine three invasive cardiac services: diagnostic angiography, percutaneous coronary interventions, and coronary artery bypass grafting. We document the relationship between the adoption by hospitals of these three invasive cardiac services and the characteristics of the hospitals, their markets, and the interactions among them, from 1997 to 2014. The results show that the probability of hospitals’ adopting a new cardiac service depends on competition in two distinct ways: (1) hospitals are substantially more likely to adopt an invasive cardiac service if competitor hospitals also adopt new services; and (2) hospitals are less likely to adopt a new service if a larger fraction of the nearby population already has geographic access to the service at a nearby hospital. The first effect is stronger, leading to the net effect that hospitals duplicate rather than expand access to care. In addition, for-profit hospitals are considerably more likely to adopt these cardiac services than are either nonprofit or government-owned hospitals. Nonprofit hospitals in high-penetration, for-profit markets are also more likely to adopt them relative to other nonprofits. These results suggest that factors other than medical need—such as a medical arms race—partially explain technological adoption.

Keywords

Analysis of health care markets Cardiac treatment Hospital competition Access to care For-profit hospital Nonprofit hospital 

Notes

Acknowledgements

The authors thank Stephanie Tomlin, MIHCL, MPA and Weiping Zhou, MS in the Data Analytic Core at The Dartmouth Institute [supported by the National Institute on Aging (PO1-AG19783)] for data support, and Christopher Snyder and an anonymous reviewer for helpful comments. We also thank Jessi Bulaon, Henry Kim, Olivia Metcalfe, Matthew McCabe, Lynn McClelland, Ben Nyblade, and Matthew Parson for research assistance. Horwitz thanks the UCLA School of Law for summer research support.

Funding

Funding was provided by UCLA School of Law.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.UCLA and NBERUCLA School of LawLos AngelesUSA
  2. 2.Department of Health Policy and AdministrationThe Pennsylvania State UniversityUniversity ParkUSA
  3. 3.Abt AssociatesRockvilleUSA

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