Financial Leverage and Hospital Technology Adoption

Sean Shenghsiu Huang

Abstract


I examine the impacts of financial leverage on hospitals' technology adoption of capital-intensive diagnostic and therapeutic radiology services. I use the California Seismic Retrofit Mandate as an exogenous financial shock and interact it with the predetermined financial leverage level to account for the endogeneity problem between financing and operating decisions. Surprisingly, I find that financial leverage does not have significant effects on technology adoption. I do find technology adoption is positively related to hospital size and operating margin, and negatively correlated with system affiliation. Due to a small sample size, it will be worthwhile to include more hospitals in multiple states in an extended study.


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