Abstract

We empirically examine the role of information in business-to-business bargaining between hospitals and suppliers of medical technologies. Using a new data set including all purchase orders issued by over sixteen percent of US hospitals 2009-14, and differences-in-differences identification strategies based on both timing of hospitals' joining a benchmarking database and on new products entering the market, 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 they appear to result from resolving asymmetric information problems between hospitals and their suppliers. These results have implications for understanding the potential of introducing more information into relatively opaque business-to-business markets, including the emerging role of "information intermediaries" offering benchmarking data and policymakers' calls for transparency in medical device pricing.

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