Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

A surgeon's decision of when to adopt a new technology will depend on the uncertainty of the benefit from the new technology and of her skill in using it, her patient volume, her reputation for surgical skill among patients and peers, and its financial attractiveness. A physician's reputation among her peers is an important signal to primary care physicians in making referral decisions. However, very little is understood about the mechanism by which physicians create a reputation for their surgical skill, their incentives to actively manage that reputation, and its subsequent effect on future technology adoption decisions. In this paper, we develop a theoretical model describing the process of building reputation and consider the surgeon's decision of her patient case-mix in managing her reputation. We treat innovation as a potential shifter of the surgeon's reputation and derive predictions on profiles of surgeons who sort as early adopters and those as late adopters.

We focus our empirical analysis on a specific technology shock: stent grafts for aortic aneurysms. In September of 1999, the Food and Drug Administration (FDA) approved two stent graft devices for treatment of Abdominal Aortic Aneurysms (AAA). This minimally invasive procedure is a clinical alternative to open resection of the AAA with replacement. However, at the time of introduction there was clinical uncertainty about patient outcomes and side effects as well as substantial learning costs to doing this new procedure. We therefore study the role of physician selection, along attributes such as reputation, technical skill/expertise, and frequency of use in the context of vascular surgeons adopting AAA stent grafts.

We test the implications of the theoretical framework using detailed patient discharge and physician characteristics data from the state of Florida. We utilize Florida state inpatient discharge data from the state's Agency for Health Care Administration (AHCA). These data for the years 1992 through 2006 include over 1 million AAA relevant records on patient demographics, procedures and diagnoses, admitting and operating physician license numbers, hospital identifiers, year and quarter of admission, type and source of admission, disposition of patient at discharge, length of stay, and charges at a patient level. Importantly, physicians can be tracked by unique state license numbers capable of being linked to the Florida Department of Health's Health Provider Information database to obtain detailed physician characteristics.

Our work gives insight into the economic rationale underlying decisions by physicians regarding reputation profiles and technology adoption. The interaction between the surgeon's reputation stock and her decision of when to adopt a new technology lies at the heart of the physician's role as her patient's agent. While it may be in the best interest of patients of highly skilled physicians to delay adoption of new technologies until they have greater precision in their evaluation of its quality, reputation maintenance may be welfare decreasing. Alternatively, adopting quickly could lead to immediately adverse effects for patients. Our analysis will push forward the understanding of physicians as economic agents in this manner.