Mandatory disclosures of medical-device pricing will not guarantee price reductions for consumers and hospitals, and could potentially increase costs through collusive price-setting activities by device manufacturers, according to a new study sponsored by the medical-device trade and lobbyist group Advanced Medical Technology Association, or AdvaMed.
The study reviews the financial effects of price transparency on industries such as cell phones, groceries and railroads. It concludes that price disclosure has sometimes had a negative impact on consumers as manufacturers have moved to price-fix in an effort to discourage competitive pricing, and service providers have been limited in their ability to negotiate secret manufacturer discounts that can then be passed on to consumers.
The report could not determine, however, whether medical-device price transparency would have a similar effect on healthcare service expenses, and even acknowledged that certain effects and conditions could serve to reduce costs to hospitals and consumers. They include: the ability to lower shop-around costs to consumers and hospitals, and the ability to provide up-to-date pricing information to purchasers. In addition, open-industry competition could force manufacturers to offer more competitive pricing as well as force hospitals competing for patients to pass those savings along to consumers.
The study, Is Greater Price Transparency Needed in the Medical Device Industry?, was conducted by Robert Hahn, executive director of the Reg-Markets Center, a market-regulations research firm, and Hal Singer, president of Criterion Economics, a government-regulations consulting firm catering to private industry. -- by Shawn Rhea