Medical Technology Diffusion and Over-Use: The Role of Markets, Regulation and Information
While the evidence suggests that medical technology innovations have been cost-effective on average in improving population health, these gains have not been evenly distributed throughout the population. The variations across different geographic markets and hospitals in the use of medical technology suggests that new medical technologies are potentially under- and over-utilized, and that medical care technology may not be optimally diffusing. Given the large costs and health consequences of over- and under-use, the welfare loss from non-optimal diffusion and use of medical technologies is likely significant. In this session, we present three papers focused on understanding the mechanisms underlying the diffusion and over-use of medical procedures focusing on the role of markets, regulation and information. The first paper by Pinar Karaca-Mandic and Robert J. Town studies the diffusion of drug-eluting stents with a primary focus on the role of physician market structure. The second paper by Lauren Hersch Nicholas investigates the role of a Medicare regulation that restricted the receipt of bariatric surgery, and extended coverage of a substitutable but less effective procedure on treatment choice and the diffusion of the latter procedure among Medicare and non-Medicare patients. The third paper by Carrie Colla, Nancy Morden, Thomas Sequist and Meredith Rosenthal explores the overuse of tests and procedures recommended against by the American Board of Internal Medicine (ABIM) Foundation’s Choosing Wisely program, a program designed to reduce the use of spending and treatments with uncertain or low-value.