ISPS Health Center Seminar: Ashley Swanson (U Penn) “Transparency and Negotiated Prices”

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

Abstract: “We empirically examine the role of information in bargaining between hospitals and suppliers. Using a new data set including all purchase orders issued by over ten percent of US hospitals 2009-13, and differences-in-differences identification strategies based on timing of hospitals’ joining a benchmarking database, we find that access to information on purchasing by peer hospitals leads to reductions in prices. These reductions are concentrated among hospitals previously paying high prices relative to other hospitals and for products purchased in relatively large volumes, and appear to result from solving both asymmetric information problems between hospitals and their suppliers and also agency conflicts between hospital administrators and purchasing negotiators. The results have implications for the emerging role of “information intermediaries” in business-to-business bargaining and calls for transparency in medical device pricing specifically.”

Bio: Dr. Swanson is an applied microeconomist studying the industrial organization of health care. Her research primarily focuses on the effects of information and incentives on both the supply side and the demand side of health care markets. She has studied the impact of physician ownership of hospitals on quality and treatment patterns, the role of information in hospital purchasing of physician preference items, and how Medicare Part D enrollees respond to complex nonlinear price incentives. Prior to The Wharton School, she worked at Analysis Group. Dr. Swanson holds a PhD in economics from the Massachusetts Institute of Technology. She is also a Faculty Research Fellow at the National Bureau of Economic Research in Cambridge, MA.