Preliminary . Do Not Quote Cutting Edge Or Chopping Block : Does Innovation In Hospitals Raise Malpractice Risk ?

Adopting new technologies alters a hospital’s risk of liability for adverse medical events. Using 1990-1993 data from Florida hospitals, we identify all in-hospital incidents leading to malpractice claims against the hospital and physicians. Hospital innovativeness is measured by constructing a Baker-Spetz technology index in which the 22 included services are weighted by their relative rarity. We also divide the index into two sub-indexes: one for risk-reducing technologies such as diagnostic equipment, and one for risk-enhancing technologies, principally those involving surgical interventions. Controlling for case-mix severity, we find evidence that the hospital's rate of malpractice is favorably affected by its relative innovativeness, scale of operations, and other hospital characteristics. General Field Designations: Analysis of Health Care Markets [K13] Tort Law and Product Liability [I11] Technological Change: Choices and Consequences [O33]