Market and Organization Impact on Medical Technology Diffusion: Outcomes and Value

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DESCRIPTION (provided by applicant): New medical technology has improved health care outcomes, but it is also the leading driver of rapidly rising medical care costs. In an era of high cost, technology-intensive medicine, when constraining the growth of health care expenditures has become a critical national imperative, it is vital to understand how substantial changes in health care markets, re-organization of health care systems, and the introduction of new payment policies impact the adoption of new medical technology, its clinical outcomes, and its associated costs. Because new medical technology is so frequently used inefficiently, and because the twin policy goals of improving health care quality and restraining health care cost increases will necessitate much more efficient technology use, comprehensive understanding of how contemporary health care organizations, markets, and payment policies influence technology adoption is essential. The U.S. has a robust and innovative medical technology industry that introduces a perpetual stream of high-cost therapies into the health care marketplace annually, particularly in the clinical domains of cardiovascular and orthopedic medicine. This phenomenon has occurred simultaneously with dramatic health care system changes that are likely to impact technology use, including a marked increase in the number of physician practices that have been acquired by hospitals and their parent integrated delivery systems, as well as growth in the size and market power of these delivery systems. In the context of these fundamental system changes, our project will study the adoption of a broad array of innovative medical devices in the high-cost, high-technology specialties of cardiology and orthopedics from 2006-2014. Medical devices are an ideal vehicle for understanding the dynamics of technology diffusion because new, high-cost devices are particularly sensitive to market forces, organization effects, and payment policy changes-a natural result of device utilization occurring at a single organizational "decision point" involving both physicians and hospitals. To improve the understanding of the diffusion of new medical technology, we propose a project that will use Medicare and private payer data, combined with detailed annual survey data on health care markets and organizations, to pursue the following 3 specific aims: (1) to understand the role of market factors such as competition and peer behavior on physicians' decisions to adopt new technologies, the relevant clinical outcomes resulting from these technologies, and their associated costs; (2) to assess the influence of health care provider organizational changes, with an emphasis on the changes resulting from increased vertical and horizontal integration, on new technology diffusion, relevant clinical outcomes, and associated costs; (3) to investigate how new payment policies have affected the diffusion of new health care technology, with a particular focus on the Medicare Shared Savings Program that is an integral part of Medicare's new Accountable Care Organization initiative. Completion of this research project will inform future policymaking to improve the efficiency and value of medical innovation diffusion.