Provider responses to market entry under competing health technologies

Daniel Avdic (), Bo Lagerqvist (), Nils Gutacker (), Giovanni van Empel () and Johan Vikström ()
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Daniel Avdic: Centre for Health Economics Research and Evaluation, University of Technology Sydney
Bo Lagerqvist: UCR and SCAAR Study Group, Uppsala University
Nils Gutacker: Centre for Health Economics, University of York
Giovanni van Empel: Department of Health Economics, Wellbeing, and Society, The Australian National University
Johan Vikström: IFAU, Uppsala University

No 2025-10, Working Papers from Centre for Health Economics, Monash University

Abstract: We study 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. We isolate supply-side effects by exploiting that patients can-not choose their hospital and compare outcomes of cardiac patients residing in areas affected and unaffected by provider market entry, respectively. We show 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.

Keywords: hospitals; market entry; technological substitution; supplier-induced demand; heart attacks (search for similar items in EconPapers)
JEL-codes: D23 I11 I18 L22 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-eur
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