The Landscape of Hospital Competition for Technology Adoption: A New Medical Arms Race

Abstract

The objective of our study is to explore the dual influences of market competition and the prevalence of technology in the market on a hospital’s level of medical technology. Following the core tenets of contingency theory and institutional theory, we hypothesized a positive influence of both the increasing level of hospital competition in the market and the peer hospital’s level of technology in the market on the hospital’s greater level of medical technology. With a multilevel modeling with random effects, we analyzed 13,217 general acute care hospitals in the U.S. between the years 2012-2018, which exclude critical access hospitals and federally-governed hospitals. We expect this paper can help administrators and policymakers balance between the costs and potential benefits of technology utilization for better health outcomes. The findings of our study indicate that a hospital’s medical technology level corresponds not only to competitiveness in the market but also to its competitor’s behaviors with respect to instituting advanced medical technology. It is surprising that hospitals tend to be less responsive to the market or societal needs. We suggest that health care managers need to be more attentive to societal needs when making investment decisions. Health policymakers may take hospitals’ lack of social responsiveness into consideration in order to guide them toward adequate and appropriate medical technology adoption strategies that may increase social welfare, assure quality, and establish a safer healthcare environment.