Diffusion of medical technology: the role of financing

Abstract

In the last decade the pace of innovation in medical technology has accelerated: hence the need to better identify and understand the real forces behind the adoption and diffusion of medical technology innovations in clinical practice. Among these forces, financial incentives may be expected to play a major role. The purpose of this paper was to assess the influence of financing mechanisms for new medical devices and correlated procedures on their diffusion. The analysis was carried out in the Italian inpatient cardiovascular area and applied to drug eluting stents over the period 2003-07. The paper's main hypothesis, that higher levels of reimbursement encourage technology diffusion, was rejected. So was the hypothesis that private hospitals may be more sensitive to tariff levels than public hospitals. A statistically significant difference was found only between hospitals that are funded on a Diagnosis-Related Groups (DRGs) basis and those that are not, with the former showing higher levels of technology diffusion. These results warn policy makers against excessive reliance on specific reimbursement fee changes as a way of steering provider behaviour.