Provider Responses to Market Entry Under Competing Health Technologies

The paper presented in this ZEW Research Seminar studies how multi-technology hospitals respond to market entry of single-technology competitors using a rescindment of regulations for heart attack treatments that prompted a rapid expansion of catheterization laboratories (cath labs) in Sweden. The authors isolate supply-side effects by exploiting that patients cannot choose their hospital and compare outcomes of cardiac patients residing in areas affected and unaffected by provider market entry, respectively. The paper shows that patients with indications for cardiac surgery were more likely to receive catheter-based treatment after a cath lab opened in their hospital, and document increases in adverse health outcomes for inframarginal patients. Incumbent hospitals responded to this demand reallocation by augmenting their own demand for surgery, but to a lesser extent and without patient health consequences.