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Adoption and learning across hospitals: The case of a revenue-generating practice

Adam Sacarny

Journal of Health Economics, 2018, vol. 60, issue C, 142-164

Abstract: Performance-raising practices tend to diffuse slowly in the health care sector. To understand how incentives drive adoption, I study a practice that generates revenue for hospitals: submitting detailed documentation about patients. After a 2008 reform, hospitals could raise their Medicare revenue over 2% by always specifying a patient's type of heart failure. Hospitals only captured around half of this revenue, indicating that large frictions impeded takeup. Exploiting the fact that many doctors practice at multiple hospitals, I find that four-fifths of the dispersion in adoption reflects differences in the ability of hospitals to extract documentation from physicians. A hospital's adoption of coding is robustly correlated with its heart attack survival rate and its use of inexpensive survival-raising care. Hospital–physician integration and electronic medical records are also associated with adoption. These findings highlight the potential for institution-level frictions, including agency conflicts, to explain variations in health care performance across providers.

Keywords: Hospitals; Healthcare; Technology adoption; Firm performance; Upcoding (search for similar items in EconPapers)
JEL-codes: D22 I1 O31 O33 L2 (search for similar items in EconPapers)
Date: 2018
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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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