Determinants of Price Discrimination in the Acquisition of Medical Devices

Abstract

Medical device expenditures are an important driver of the growth in health care spending and hospitals pay significantly different prices for the same medical device. This paper uses hospitals’ acquisition data to explore the determinants of price discrimination in the acquisition of medical devices across Italian hospitals considering demand factors such as institutional characteristics of the buyer, devices substitution patterns, area of localization, and purchase conditions. I find evidence that public hospital trusts and those located in northern regions are more efficient in acquiring medical devices, and that more flexibility in contracting with different device manufacturers and higher purchase volumes reduce the likelihood of paying higher prices.