Lobbying Physicians: Payments from Industry and Hospital Procurement of Medical Devices

58 Pages Posted: 28 Mar 2022

See all articles by Matthew Grennan

Matthew Grennan

National Bureau of Economic Research (NBER); University of California, Berkeley - Haas School of Business

Ashley Swanson

Columbia University - Columbia Business School; NBER

Alon Bergman

University of Pennsylvania - The Wharton School; University of Pennsylvania - Leonard Davis Institute of Health Economics

Date Written: February 22, 2022

Abstract


We draw upon newly merged administrative data sets to study the relationship between payments from medical technology firms to physicians and medical device procurement by hospitals. These payments (and the interactions that accompany them) may facilitate the transfer of valuable information to and from physicians. However, they may also influence physicians’ preferences, and in turn hospital device procurement, in favor of paying firms. Payments are pervasive: 87 percent of device sales in our sample occurred at a hospital where a relevant physician received a payment from a device firm. Payments are also highly correlated with spending within a firm-hospital pair: event studies suggest that a large positive increase in payments to a given hospital from a given firm ($438 per physician on average, or 112 percent of the mean) is associated with 27 percent higher expenditures on the paying firm’s devices post-event. Finally, we explore how payments mediate the relationship between expertise and device procurement patterns. Hospitals affiliated with the top Academic Medical Centers (AMCs), which plausibly represent an expert benchmark, purchase a different mix of devices than other hospitals, and payments to hospitals outside the top AMCs are correlated with larger deviations from the procurement patterns of top AMC hospitals.

Keywords: Procurement, Expert Agency, Influence

JEL Classification: I00, L14, L22

Suggested Citation

Grennan, Matthew and Grennan, Matthew and Swanson, Ashley and Bergman, Alon, Lobbying Physicians: Payments from Industry and Hospital Procurement of Medical Devices (February 22, 2022). Available at SSRN: https://ssrn.com/abstract=4040364 or http://dx.doi.org/10.2139/ssrn.4040364

Matthew Grennan (Contact Author)

National Bureau of Economic Research (NBER) ( email )

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University of California, Berkeley - Haas School of Business ( email )

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2220 Piedmont Avenue
Berkeley, CA 94720
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Ashley Swanson

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alon Bergman

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

University of Pennsylvania - Leonard Davis Institute of Health Economics ( email )

Philadelphia, PA
United States

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