Working Paper: CEPR ID: DP7558
Authors: Pedro Luis Pita Barros; Xavier Martinez-Giralt
Abstract: This paper addresses the impact of payment systems on the rate of technology adoption.We present a model where technological shift is driven by demand uncertainty, increased patients' benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients' benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favors more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems.
Keywords: Health Care; Payment Systems; Technology Adoption
JEL Codes: I11; I12; Q33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patient benefits (I11) | technology adoption (O33) |
| reimbursement levels (I18) | technology adoption (O33) |
| cost reimbursement (M41) | technology adoption (O33) |
| DRG payment system (J33) | technology adoption (O33) |
| high reimbursement relative to margin (D61) | technology adoption (O33) |