Health Affairs, 27, no. 6 (2008): 1544-1553 doi: 10.1377/hlthaff.27.6.1544 © 2008 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

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Medical Devices

Price Transparency For Medical Devices

Hospital buyers of medical devices contract with manufacturers with market power that sell differentiated products. The medical staff strongly influences hospitals’ choice of devices. Sellers have sought to limit disclosure of transaction prices. Policy-makers have proposed legislation mandating disclosure, in the interest of greater transparency. We discuss why a manufacturer might charge different prices to different hospitals, the role that secrecy plays, and the consequences of secrecy versus disclosure. We argue that hospital-physician relationships are key to understanding what manufacturers gain from price discrimination. Price disclosure can catalyze a restructuring of those relationships, which, in turn, can improve hospital bargaining.

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