The Effect of Competition on Technology Diffusion and Treatment Choices in Healthcare Market

This dissertation explores the effect of competition among physicians on the technology diffusion and treatment choices in health care market. In Chapter 2, I study the effect of competition among physicians on their use of a new technology for coronary heart disease in Pennsylvania from 2003-2008: drug-eluting stents in percutaneous coronary intervention (PCI) procedures. I use inpatient data from the Pennsylvania Health Care Cost Containment Council (PHC4), physician data from public websites, and hospital data from American Hospital Association (AHA) Annual Survey of Hospitals, and find that competition hastened diffusion of drug-eluting stents (DES) from 2003-2006, when physicians were quickly adopting the new technology, and hastened abandonment ofDES after 2006, when new information came out revealing problems with DES. I also compare the competition effect among star physicians and non-star physicians, and find that the effect of competition is stronger on star physicians than on non-star physicians.In Chapter 3, I examine the effect of relative strength of competition among providers onthe treatment choices of procedures (coronary artery bypass surgery (CABG) and percutaneous coronary intervention (PCI)) and the appropriateness of care for coronary heart disease patients in Pennsylvania from 2000-2008. By using data Pennsylvania Health Care Cost Containment Council (PHC4) and hospital service areas (HSAs) from the Dartmouth Alas of Health Care, I find that in areas where competition among CABG surgeons is stronger than the competition among PCI physicians, patients are more likely to be treated by CABG surgery. I also find that as competition among CABG surgeons in an area increases, patients are more likely to be treated by CABG, with the result that the marginal patient receiving CABG is less clinically appropriate for CABG.