Managed Care and Technology Diffusion: The Case of MRI

Health Affairs

Volumn 17, Issue 5, 1998, Pages 195-207

  Baker, Laurence C ^a   Wheeler, Susan K ^b  

^a NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

^b NONE

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; BIOMEDICAL TECHNOLOGY ASSESSMENT; HEALTH CARE DELIVERY; HEALTH CARE POLICY; HEALTH MAINTENANCE ORGANIZATION; HUMAN; MASS COMMUNICATION; NUCLEAR MAGNETIC RESONANCE IMAGING; REGRESSION ANALYSIS; STATISTICS; TECHNOLOGY; UNITED STATES; UTILIZATION REVIEW;

DIFFUSION OF INNOVATION; HEALTH MAINTENANCE ORGANIZATIONS; HEALTH POLICY; HEALTH SERVICES ACCESSIBILITY; HUMANS; MAGNETIC RESONANCE IMAGING; REGRESSION ANALYSIS; TECHNOLOGY TRANSFER; TECHNOLOGY, HIGH-COST; UNITED STATES;

EID: 0037755862     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.17.5.195     Document Type: Article

References (46)

1. See, for example, L.C. Baker, "The Effect of HMOs on Fee-for-Service Health Care Expenditures: Evidence from Medicare," Journal of Health Economics (August 1997): 453-482; and J.C. Robinson, "Decline in Hospital Utilization and Cost Inflation under Managed Care in California," Journal of the American Medical Association (2 October 1996): 1060-1064.
2. See, for example, L.C. Baker, "The Effect of HMOs on Fee-for-Service Health Care Expenditures: Evidence from Medicare," Journal of Health Economics (August 1997): 453-482; and J.C. Robinson, "Decline in Hospital Utilization and Cost Inflation under Managed Care in California," Journal of the American Medical Association (2 October 1996): 1060-1064.
3. J.P. Newhouse, "Medical Care Costs: How Much Welfare Loss?" Journal of Economic Perspectives 6, no. 3 (1992): 3-21; J.P. Newhouse, "An Iconoclastic View of Health Cost Containment," Health Affairs (Supplement 1993): 152-171; and W.B. Schwartz, "In the Pipeline: A Wave of Valuable Medical Technology," Health Affairs (Summer 1994): 70-79.
4. J.P. Newhouse, "Medical Care Costs: How Much Welfare Loss?" Journal of Economic Perspectives 6, no. 3 (1992): 3-21; J.P. Newhouse, "An Iconoclastic View of Health Cost Containment," Health Affairs (Supplement 1993): 152-171; and W.B. Schwartz, "In the Pipeline: A Wave of Valuable Medical Technology," Health Affairs (Summer 1994): 70-79.
5. J.P. Newhouse, "Medical Care Costs: How Much Welfare Loss?" Journal of Economic Perspectives 6, no. 3 (1992): 3-21; J.P. Newhouse, "An Iconoclastic View of Health Cost Containment," Health Affairs (Supplement 1993): 152-171; and W.B. Schwartz, "In the Pipeline: A Wave of Valuable Medical Technology," Health Affairs (Summer 1994): 70-79.
6. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
7. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
8. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
9. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
10. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
11. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
12. See, for example, L. Tornatzky et al., The Process of Technological Innovation: Reviewing the Literature (Washington: National Science Foundation, Division of Industrial Science and Technological Innovation, 1983); A.L. Hillman and J.S. Schwartz, "The Adoption and Diffusion of CT and MRI in the United States," Medical Care (November 1985): 1283-1294; B.J. Hillman et al., "Adoption and Diffusion of a New Imaging Technology: A Magnetic Resonance Imaging Prospective," American Journal of Roentgenology (October 1984): 913-917; S. Globerman, "The Adoption of Computer Technology in Hospitals," Journal of Behavioral Economics (Winter 1982): 67-95; S.R. Baker, "The Diffusion of High Technology Medical Innovation: The Computed Tomography Scanner Example," Social Science and Medicine 13, no. 3 (1979): 155-162; R.H. Lee and D.M. Waldman, "The Diffusion of Innovations in Hospitals: Some Econometric Considerations," Journal of Health Economics 4, no. 4 (1985): 373-380; and H.D. Banta, "The Diffusion of the Computed Technology (CT) Scanner in the United States," International Journal of Health Services 10, no. 2 (1980): 251-269.
13. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
14. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
15. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
16. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
17. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
18. On demand, see, for example, J.D. Teplensky et al., "Hospital Adoption of Medical Technology: An Empirical Test of Alternative Models," Health Services Research (August 1995): 437-465; A.A. Romeo et al., "Prospective Reimbursement and the Diffusion of New Technologies in Hospitals," Journal of Health Economics 3, no. 1 (1984): 1-24; G.F. Anderson and E.P. Steinberg, "To Buy or Not to Buy: Technology Acquisition under Prospective Payment," New England Journal of Medicine (19 July 1984): 182-185; and R.G. Evens, "Economic Implications of a New Technology Installation: A CT Model," American Journal of Roentgenology (April 1981): 673-677. On the regulatory environment, see, for example, D.S. Salkever and T.W. Bice, "The Impact of Certificate-of-Need Controls on Hospital Investment," Milbank Memorial Fund Quarterly 54, no. 2 (1976): 185-214. On competitive forces, see, for example, J.D. Teplensky, "Organizational Adoption of Technological Innovations: Binary Decision Behavior or Continuum of Options" (Working paper, Case Western Reserve University, 1994).
19. See, for example, R.H. Miller and H.S. Luft, "Does Managed Care Lead to Better or Worse Quality of Care?" Health Affairs (September/October 1997): 7-25; and R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association (18 May 1994): 1512-1519.
20. See, for example, R.H. Miller and H.S. Luft, "Does Managed Care Lead to Better or Worse Quality of Care?" Health Affairs (September/October 1997): 7-25; and R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association (18 May 1994): 1512-1519.
21. See, for example, D.M. Cutler and L. Sheiner, "Managed Care and the Growth of Medical Expenditures," in Frontiers in Health Policy Research, ed. A.M. Garber (Cambridge, Mass.: MIT Press, forthcoming); M. Chernew, R. Hayward, and D. Scanlon, "Managed Care and Open-Heart Surgery Facilities in California," Health Affairs (Spring 1996): 191-201; D.M. Cutler and M.B. McClellan, "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Paper no. 5751 (Cambridge, Mass.: National Bureau of Economic Research, 1996); and S.C. Hill and B.L. Wolfe, "Testing the HMO Competitive Strategy: An Analysis of Its Impact on Medical Resources," Journal of Health Economics (June 1997): 261-286.
22. See, for example, D.M. Cutler and L. Sheiner, "Managed Care and the Growth of Medical Expenditures," in Frontiers in Health Policy Research, ed. A.M. Garber (Cambridge, Mass.: MIT Press, forthcoming); M. Chernew, R. Hayward, and D. Scanlon, "Managed Care and Open-Heart Surgery Facilities in California," Health Affairs (Spring 1996): 191-201; D.M. Cutler and M.B. McClellan, "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Paper no. 5751 (Cambridge, Mass.: National Bureau of Economic Research, 1996); and S.C. Hill and B.L. Wolfe, "Testing the HMO Competitive Strategy: An Analysis of Its Impact on Medical Resources," Journal of Health Economics (June 1997): 261-286.
23. See, for example, D.M. Cutler and L. Sheiner, "Managed Care and the Growth of Medical Expenditures," in Frontiers in Health Policy Research, ed. A.M. Garber (Cambridge, Mass.: MIT Press, forthcoming); M. Chernew, R. Hayward, and D. Scanlon, "Managed Care and Open-Heart Surgery Facilities in California," Health Affairs (Spring 1996): 191-201; D.M. Cutler and M.B. McClellan, "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Paper no. 5751 (Cambridge, Mass.: National Bureau of Economic Research, 1996); and S.C. Hill and B.L. Wolfe, "Testing the HMO Competitive Strategy: An Analysis of Its Impact on Medical Resources," Journal of Health Economics (June 1997): 261-286.
24. See, for example, D.M. Cutler and L. Sheiner, "Managed Care and the Growth of Medical Expenditures," in Frontiers in Health Policy Research, ed. A.M. Garber (Cambridge, Mass.: MIT Press, forthcoming); M. Chernew, R. Hayward, and D. Scanlon, "Managed Care and Open-Heart Surgery Facilities in California," Health Affairs (Spring 1996): 191-201; D.M. Cutler and M.B. McClellan, "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Paper no. 5751 (Cambridge, Mass.: National Bureau of Economic Research, 1996); and S.C. Hill and B.L. Wolfe, "Testing the HMO Competitive Strategy: An Analysis of Its Impact on Medical Resources," Journal of Health Economics (June 1997): 261-286.
25. Hillman and Schwartz, "The Adoption and Diffusion of CT and MRI."
26. R.A. Bell, "Economics of MRI Technology," Journal of Magnetic Resonance Imaging (January/February 1996): 10-25.
27. Ibid.; and informal communication with representatives from General Electric and Siemens, two of the main manufacturers of MRI equipment. Note that many lower-field machines are available for less than $1 million.
28. Bell, "Economics of MRI Technology;" and E.P. Steinberg and R.G. Evens, "Economics," in Magnetic Resonance Imaging, ed. D.D. Stark and W.G. Bradley (St. Louis: C.V. Mosby, 1988).
29. Bell, "Economics of MRI Technology;" and E.P. Steinberg and R.G. Evens, "Economics," in Magnetic Resonance Imaging, ed. D.D. Stark and W.G. Bradley (St. Louis: C.V. Mosby, 1988).
30. Bell, "Economics of MRI Technology," cites several observers of the MRI field as believing that managed care will reduce MRI use. On the other hand, he also notes that managed care has not driven down use in some facilities.
31. Ibid.
32. See D.M. Makuc et al., Vital and Health Statistics - Health Care Service Areas for the United States (Washington: National Center for Health Statistics, November 1991). In addition, we verified our results using counties and metropolitan statistical areas as alternate definitions and found that results were consistent with those reported.
33. Of the fixed sites surveyed, 86 percent reported the number of magnets they had in operation (2,140 of 2,485). Size of nonresponding sites was imputed using responses to previous surveys and/or other information. Because most sites have one magnet, and sites that have multiple magnets are relatively easy to identify, this imputation is expected to be quite accurate. To verify our results, we reexamined the number of magnets per population using only actual reported magnet data. This produced estimates of the effect of HMO market share consistent with those reported.
34. Of the sites surveyed, 76 percent provided procedure data (2,816 of 3,705). In addition, TMG provided imputed data that filled in procedure volume data for nonreporting sites. Of the sites that did not report 1994 procedure volume, 451 (51 percent) had reported 1992 volume on an earlier survey, and missing 1994 data were filled in using 1992 data adjusted for average 1992-1994 changes in volume for sites of the same type (nonhospital sites, hospitals with fewer than 200 beds, hospitals with 200-399 beds, and hospitals with 400 or more beds). The remaining missing 1994 cases were filled in using regression imputation that accounted for site type and the number of magnets at the site. We believe that use of the imputed data provides a more accurate portrayal of MRI utilization nationwide, and so the data reported in the paper include the imputed information. Analyses that use only the actual reported survey information produce similar results but understate actual procedure use. For procedures per fixed site, we measured the number of procedures performed at fixed sites that reported data on procedures. We analyzed procedures per fixed site only for markets that had at least one fixed site and in which at least one of the sites reported actual procedure data. Because we are looking at procedures per site and not at procedures per population, we can obtain accurate estimates without relying on imputed procedure data here. Of the markets in the sample, 492 had at least one fixed site. In fifty of these markets, procedure data from fixed sites were not available, which left 442 markets for analysis. We examined the characteristics of markets that were excluded because of missing data and found that they did not differ statistically significantly from included markets in measurable ways (for example, HMO market share). We also experimented with including only markets in which all of the fixed sites reported procedure data and found that this did not affect our results.
35. Group Health Association of America, 1995 National Directory of HMOs (Washington: GHAA, 1995).
36. Baker, "The Effect of HMOs on Fee-for-Service Health Care Expenditures."
37. The ability of aggregation to reduce estimation error depends on the exact underlying structure of the errors. In our case, since most HMOs serve relatively small areas in one or two HCSAs, we suspect that a key component of the estimation error occurs idiosyncratically across counties within HCSAs. In this case, aggregation to the HCSA level would significantly dampen the underlying errors.
38. InterStudy, Competitive Edge (Excelsior, Minn.: InterStudy Publications, 1995).
39. One estimate for an HCSA in central New Jersey appeared to be erroneously high, and we adjusted our data to conform to the InterStudy estimate for the Philadelphia-Wilmington-Vineland (PA-DE-NJ) metropolitan statistical area.
40. The dependent variables in the regressions are not transformed in any way. Since the distribution of some of the variables appeared on visual inspection to be skewed, we did reestimate the models using the natural logarithms of the dependent variables. In no case did this influence our findings, and so we have chosen to present the more easily interpreted results based on the untransformed variables. Detailed results of the analyses using the log-transformed variables are available from the authors at the Department of Health Research and Policy, HRP Redwood Building, Stanford University, Stanford, California 94305-5092.
41. We verified our results using several alternative specifications including a variety of different cutoff points for the groups, quadratic and cubic polynomials in market share, and linear and quadratic splines. These specifications all produced results consistent with those reported. We also experimented with the use of HMO market-share estimates from earlier years, since the effects of HMOs may take time to become apparent. This did not affect the results.
42. These calculations were done by adjusting the values shown in Exhibit 1 using the regression coefficients for the various HMO market-share groups.
43. Steinberg and Evens, "Economics," in Magnetic Resonance Imaging; and Bell, "Economics of MRI Technology."
44. Steinberg and Evens, "Economics," in Magnetic Resonance Imaging; and Bell, "Economics of MRI Technology."
45. Baker, "The Effect of HMOs on Fee-for-Service Health Care Expenditures;" and D. Dranove et al., "Determinants of Managed Care Penetration" (Mimeo, Kellogg Graduate School of Management, Northwestern University, 1996).
46. Baker, "The Effect of HMOs on Fee-for-Service Health Care Expenditures;" and D. Dranove et al., "Determinants of Managed Care Penetration" (Mimeo, Kellogg Graduate School of Management, Northwestern University, 1996).