Technological Development and Medical Productivity: The Diffusion of Angioplasty in New York State

A puzzling feature of many medical innovations is that they simultaneously appear to reduce unit costs and increase total costs. We consider this phenomenon by examining the diffusion of percutaneous transluminal coronary angioplasty (PTCA) -- a treatment for coronary artery disease -- over the past two decades. We find that growth in the use of PTCA led to higher total costs despite its lower unit cost. Over the two decades following PTCA's introduction, however, we find that the magnitude of this increase was reduced by between 10% and 20% due to the substitution of PTCA for CABG. In addition, the increased use of PTCA appears to be a productivity improvement. PTCAs that substitute for CABG cost less and have the same or better outcomes, while PTCAs that replace medical management appear to improve health by enough to justify the cost.

The Role of Information in Medical Markets: An Analysis of Publicly Reported Outcomes in Cardiac Surgery

During the past two decades, several public and private organizations have initiated programs to report publicly on the quality of medical care provided by specific hospitals and physicians. These programs have sparked broad debate among economists and policy makers concerning whether, and to what extent, they have improved or harmed medical productivity. We take advantage of a cross-sectional time series of different hospitals to address two fundamental questions about quality reporting. First, we examine whether report cards affect the distribution of patients across hospitals. Second, we determine whether report cards lead to improved medical quality among hospitals identified as particularly bad or good performers. Our data are from the longest-standing effort to measure and report health care quality the Cardiac Surgery Reporting System (CSRS) in New York State. Using data for 1991 through 1999, we find that CSRS affected both the volume of cases and future quality at hospitals identified as poor performers. Poor performing hospitals lost relatively healthy patients to competing facilities and experienced subsequent improvements in their performance as measured by risk-adjusted mortality.

Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery

Prior studies suggest that, with elastically supplied inputs, free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher-quality surgeons and that this entry was approximately welfare neutral.

Environmental testing to prevent on-orbit TDRS failures

Can improved environmental testing prevent on-orbit component failures such as those experienced in the Tracking and Data Relay Satellite (TDRS) constellation? TDRS communications have been available to user spacecraft continuously for over 11 years, during which the five TDRS's placed in orbit have demonstrated their redundancies and robustness by surviving 26 component failures. Nevertheless, additional environmental testing prior to launch could prevent the occurrence of some types of failures, and could help to maintain communication services. Specific testing challenges involve traveling wave tube assemblies (TWTA's) whose lives may decrease with on-off cycling, and heaters that are subject to thermal cycles. The development of test conditions and procedures should account for known thermal variations. Testing may also have the potential to prevent failures in which components such as diplexers have had their lives dramatically shortened because of particle migration in a weightless environment. Reliability modeling could be used to select additional components that could benefit from special testing, but experience shows that this approach has serious limitations. Through knowledge of on-orbit experience, and with advances in testing, communication satellite programs might avoid the occurrence of some types of failures, and extend future spacecraft longevity beyond the current TDRS design life of ten years. However, determining which components to test, and how must testing to do, remain problematical

Challenging Certification of a Class Action: A Hypothetical

This is intended to be an article for the lawyer whose client is suddenly confronted with one of these Frankenstein monster(s) posing as a class action. Our objective is to set forth the arguments and methods available to counsel in seeking to prevent a class from being certified. In order to sharpen the analysis and arguments we will use a hypothetical class action as a model. Since most of the criticism and praise of the class action device has been focused on complaints filed under section (b)(3), observations will be directed primarily at that part of Rule 23. If, in the end, this writing sounds more like a brief in support of a motion to dismiss a complaint as a class action, rather than a scholarly analysis of Rule 23, we will have accomplished our objective

Consumption inequality and income uncertainty

This paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting. It highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality. We derive conditions under which the growth of variances and covariances of income and consumption can be used to separately identify the growth in the variance of permanent and transitory income shocks. Household data from Britain for the period 1968-1992 are used to show a strong growth in transitory inequality toward the end of this period, while younger cohorts are shown to face significantly higher levels of permanent inequality