Technology Adoption and Market Allocation:The Case of Robotic Surgery
The adoption of healthcare technology is central to improving productivity in this sector. To provide new evidence on how technology affects healthcare markets, we focus on one area where adoption has been particularly rapid: surgery for prostate cancer. Over just six years, robotic surgery grew to become the dominant intensive prostate cancer treatment method. Using a difference-in-differences design, we show that adopting a robot drives prostate cancer patients to the hospital. To test whether this result reflects market expansion or business stealing, we also consider market-level effects of adoption and find they are significant but smaller, suggesting that adoption expands the market while also reallocating some patients across hospitals. Marginal patients are relatively young and healthy, inconsistent with the concern that adoption broadens the criteria for intervention to patients who would gain little from it. We conclude by discussing implications for the social value of technology diffusion in healthcare markets.
We thank Amitabh Chandra, Timothy Beatty, Pinar Karaca-Mandic, Richard Sexton, Monica Singhal, seminar participants at NBER Health Economics Boot Camp and session participants at the American Society of Health Economics virtual conference for their helpful comments. We thank Maurice Dalton, Mohan Ramanujan, and Jean Roth for their assistance with CMS data. We gratefully acknowledge support from the National Institute on Aging P01-AG005842. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper. This research was approved by the Institutional Review Boards of Columbia University and the National Bureau of Economic Research. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
R. Annetta Zhou