Innovations in technology and subsequent changes in clinical practice have often led to increases in healthcare costs. The objective of this paper is to assess the role of health technology intensity and adoption in the evolution of average health expenditures on physician services as well as on the changes in the distribution of expenditures by age and sex. We used patient-level administrative data on physician service expenditures in the Canadian Province of Ontario for the years 1 994 to 2004. The data set provides information about diagnoses, treatments, and payments to physicians with corresponding service dates, according to patient age and sex. We developed an algorithm to classify services into three levels (High, Medium, and Low) of technology and decompose changes in expenditures into these three categories of services. We found that those over the age of 65 received more high technology treatments than the younger population. Moreover, females of all ages were more likely to have medium and high technology treatment than males. Overall, the increases from applying high technology accounted for almost 60% of the growth of Ontario government health expenditures on physician services during the period investigated.