NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Transparency and Negotiated Prices: The Value of Information in Hospital-Supplier Bargaining

Matthew Grennan, Ashley Swanson

NBER Working Paper No. 22039
Issued in February 2016, Revised in February 2018
NBER Program(s):Health Care, Industrial Organization

Using a detailed dataset of hospitals' purchase orders, we find that information on purchasing by peer hospitals leads to reductions in the prices hospitals negotiate for supplies. Identification is based on staggered access to information across hospitals over time. Within coronary stents, reductions are concentrated among hospitals previously paying relatively high prices and for brands purchased in large volumes, and are consistent with resolving asymmetric information problems. Estimates across a large number of other important product categories indicate that the effects of information are largest in both absolute and relative terms for physician preference items (PPIs). Among PPIs, high-price, high-quantity hospital-brand combinations average 3.9 percent savings, versus 1.6 percent for commodities.

download in pdf format
   (975 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22039

Users who downloaded this paper also downloaded* these:
Grennan and Town w20981 Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices
Crawford, Lee, Whinston, and Yurukoglu w21832 The Welfare Effects of Vertical Integration in Multichannel Television Markets
Gans and Katz w22040 Net Neutrality, Pricing Instruments and Incentives
Coey, Larsen, and Platt w22038 A Theory of Bidding Dynamics and Deadlines in Online Retail
Chung, Gaynor, and Richards-Shubik w22037 Subsidies and Structure: The Lasting Impact of the Hill-Burton Program on the Hospital Industry
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us