Webinar: Giovanni van Empel, Monash: Provider responses to market entry under competing health technologies

Title: Provider responses to market entry under competing health technologies

with Daniel Avdic, Nils Gutacker, and Johan Vikström

Abstract: We analyze supplier-induced demand as a strategic response to market entry by exploiting the relaxation of regulatory restrictions in cardiac care that led to an expansion in the number of hospitals providing catheter-based treatment (PCI) to patients in Sweden. Since patients’ choice of hospital in the Swedish healthcare system is determined by their place of residence, hospital providers exert local monopoly powers with incentives to treat patients in-house rather than sending them to other hospitals. This may lead to non-optimal treatment choices. Relating observed treatments of residents in catchment areas where hospitals opened a PCI lab to residents in unaffected catchment areas in a difference-in-differences empirical design, we find that patients with clinical indications for cardiac surgery (CABG) were five percentage points more likely to receive a PCI after their local hospital opened a PCI lab. In contrast, we find no corresponding effect that incumbent hospitals reduced their use of PCI on their remaining patient population to offset the reduction in CABG surgery. We conclude that the expansion of PCI labs was a likely contributor to the respective rise and decline of PCI and CABG over time in Sweden.

Presenter: Giovanni van Empel, Monash University

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