This article presents an analysis of the social roots of medical service price inflation. The author argues that a struggle between hospital managers and physicians to control medical services has inflationary consequences. The author also contends that new technology acts as a strategic resource for managers in this struggle. Because the technology is new, few data exist for evaluating the demand for it and its medical and financial effects. Managers thus play a "hypothetical game" and set prices through bureaucratic means that reflect their preferences for technology and help pay for the equipment. An empirical case study involving the purchase of nuclear magnetic resonance equipment in Omaha, Nebraska, supports and illustrates the argument.
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