Improving Technology Investment Decisions at Hospitals Through System Dynamics and Decision Analysis

Medical technologies represent a major share of hospital budgets and have been driving up healthcare costs in the United States. Typically, hospitals have limited resources and have to be selective with their purchases. Despite the importance and complexity of investment decisions, most hospitals do not use structured methods or comprehensive data. In response, we developed and field-tested a data-to-decision (D2D) approach. We interviewed executives and physicians from two hospitals to learn about the role of technology and capital investment decision processes. We developed a system dynamics (SD) model for the adoption of a Da Vinci (R) surgical system. Hospital executives evaluated this technology along with other alternatives in a session we conducted using the Simple Multi-Attribute Rating Technique (SMART).