Hospital market competition and health technology diffusion: An empirical study of laparoscopic appendectomy in China

The evidence about the role of hospital market competition on health technology diffusion in developing countries is scarce. In this study, we examined the association between hospital market competition and the diffusion of health technologies in China's healthcare system. Laparoscopic appendectomy, a minimally invasive surgery for patients with acute appendicitis, was selected as a representative of cost-effective health technology. The inpatient discharge dataset linked to the annually hospital administrative data and to the demographic and socioeconomic data were used. A total of 261,922 patients who were diagnosed with acute appendicitis and had received either open appendectomy or laparoscopic appendectomy at 820 hospitals in Sichuan, China between 2017 and 2019 were included in our analyses. Our outcome measure was the use of laparoscopic appendectomy during hospitalization. We accounted for the endogeneity of hospital competition measures using the Herfindahl-Hirschman Index calculated by predicted patient flows. Controlling for the observable patient, hospital and region characteristics, multivariate logistic regression was performed to model the association between hospital competition and the diffusion of laparoscopic appendectomy. The rapid diffusion of laparoscopic appendectomy over the study period and the substantial variation in use across regions and hospitals were observed. The regression results showed that laparoscopic appendectomy diffused faster in the markets where hospitals faced more competition. Our findings suggest that the diffusion of laparoscopic appendectomy is not only driven by medical factors but also nonmedical factors like hospital market competition. Our study provides new evidence on the association between market structure and technology diffusion in China's hospital market and offers the implications of appropriate technologies diffusion in health for policymakers.