Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

The increase in health expenditure experienced by developed countries over the last decades has raised the question as which factors are responsible for this increasing trend. Several elements such as aging of the population or increased demand have been argued to contribute to the increasing medical spending. However, medical innovations have been identified to be the main driver, motivating the analysis of the diffusion of medical technologies within the health care sector. Despite the increasing interest, there is still little evidence on the mechanisms behind the diffusion process in the health care sector. International comparisons have highlighted differences across countries in diffusion patterns for coronary heart disease surgery according to the adoption time and the following uptake speed. However, these differences are captured through variables that represent highly aggregated data and further evidence is required in the mechanisms that influence individual providers.

This paper examines the factors behind the adoption and diffusion of two new surgical procedures in the UK. The aim of the analysis of the diffusion of these surgical procedures is two-fold. First, we explore the introduction of the innovation and whether the diffusion path is characterised by a substitution of the existing technology. Secondly, we analyse the incentives offered by the regulatory body responsible to design policies that influence decision makers as well as all informational and process quality aspects that providers will face in incorporating the new procedures into routine practice. Two different procedures are included in the research: carotid endarterectomy and knee endoscopy. These technologies differ in the cost impact and the severity of the health condition for which they are performed. Analysing two different technologies will allow to draw any similarities and differences in their diffusion pattern that can be explained by the characteristics of the surgical procedures under study.

We use hospital record data from 1996 to 2006 for the English NHS Hospital Episodes Statistics (HES) to examine the diffusion at the provider level. Each observation corresponds to a hospital episode in which one of the two operations was performed and recorded according to the Classification of Surgical Operations and Procedures ? 4th revision (OPCS-4). The diffusion process is dynamic in its nature in that it depicts the uptake process of a technology into practice being a process in which the technology itself may experience changes and improvements or there may be other external factors affecting diffusion. Consequently, the uptake process is analysed through dynamic panel data methods to capture the changing aspects of the technology itself and the environment in which it is introduced. The results show that the degree of innovativeness and the competitive advantage relative to existing techniques shape the diffusion of this type of innovation leading to a high degree of substitution with a marginal use of the procedure used at the time the technology was introduced.