Does advanced medical technology encourage hospitalist use and their direct employment by hospitals?

In the United States, inpatient medical care increasingly encompasses the use of expensive medical technology and, at the same time, is coordinated and supervised more and more by a rapidly growing number of inpatient‐dedicated physicians (hospitalists). In the production of inpatient care services, Hospitalist services can be viewed as complementary to sophisticated and expensive medical equipment in the provision of inpatient medical care. We investigate the causal relationship between a hospital's access to three types of sophisticated diagnostic and therapeutic medical equipment – intensity‐modulated radiation therapy, gamma knife, and multi‐slice computed tomography – and its likelihood of using hospitalists. To rule out omitted variables bias and reverse causality, we use technology‐specific Certificate of Need regulation to predict technology use. We find a strong positive association, yet no causal link between access to medical technology and hospitalist use. We also study the choice of employment modality among hospitals that use hospitalists, and find that access to expensive medical technology reduces the hospital's propensity to employ hospitalists directly. Copyright © 2008 John Wiley & Sons, Ltd.