Did the Butler Really Do It? Examining the Impact of Technology on Hospital Cost Growth

29 Pages Posted: 5 Aug 2011

See all articles by Silvio Daidone

Silvio Daidone

United Nations - Food and Agriculture Organization (FAO)

Laurence C. Baker

Stanford University; National Bureau of Economic Research (NBER)

Date Written: July 2011

Abstract

We examine the extent to which hospital technologies are associated with growth in U.S. hospital costs. We create an index capturing the availability of a range of technologies in 2214 hospitals and track over the period 1996-2007, along with financial information from Medicare Cost Reports. We find that our measures of technology availability are positively correlated with hospital costs, consistent with the view that technology is an important driver of costs. However, we find that even controlling for a large number of technologies leaves a significant portion of the growth in U.S. hospital costs unexplained. While this may at least in part reflect effects of technology not captured by our measures, it suggests that the drivers of hospital cost growth go significantly beyond commonly conceptualized measures of technological change. Finally, we identify innovations that are cost increasing or cost-saving, and the time pattern of these effects.

Keywords: technology index, hospitals, cost functions

JEL Classification: C23, C33, D24, I10

Suggested Citation

Daidone, Silvio and Baker, Laurence C., Did the Butler Really Do It? Examining the Impact of Technology on Hospital Cost Growth (July 2011). Available at SSRN: https://ssrn.com/abstract=1905429 or http://dx.doi.org/10.2139/ssrn.1905429

Silvio Daidone (Contact Author)

United Nations - Food and Agriculture Organization (FAO) ( email )

Viale delle Terme di Caracalla
Rome, Lazio 00153
Italy

Laurence C. Baker

Stanford University ( email )

HRP Redwood Bldg., Room T253
Stanford, CA 94305
United States
(650) 723-4098 (Phone)
(650) 723-3786 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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