Externalities in Hospitals and Physician Adoption of a New Surgical Technology

An Exploratory Analysis

Published in: Journal of Health Economics, v. 15, no. 6, Dec. 1996, p. 715-734

Posted on RAND.org on December 31, 1995

by Jose J. Escarce

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Much recent work on the economics of new technology adoption has investigated the roles of information and externalities. However, studies of technology adoption by physicians have not addressed these issues. This paper examines the adoption by general surgeons of laparoscopic cholecystectomy, a new surgical procedure which was introduced in 1989. The paper addresses the informational and cost externalities which may be generated when the first surgeon in a hospital adopts a new procedure. The findings suggest that access to information about laparoscopic cholecystectomy influenced surgeons' adoption behavior, and that externalities in hospitals may have hastened the diffusion of the procedure.

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