Matthew Grennan

We are hiring! Ashley Swanson and I are looking for a fulltime pre or postdoctoral research scholar for NSF funded work at the intersection of health care costs and pricing of medical technology. Please apply or share with anyone who you think might like to spend 13 years in Philly working with us on big health care data sets, machine learning, and bargaining/search/information modeling: https://www.aeaweb.org/joe/listing.php?JOE_ID=201701_111457172

Matthew Grennan is an Assistant Professor of Health Care Management at The Wharton School of the University of Pennsylvania where he teaches an undergraduate course in health care entrepreneurship and MBA courses in health care marketing and the medical device sector. He is also a research affiliate of the National Bureau of Economic Research, Leonard Davis Institute, and Strategy Research Forum.

Professor Grennan holds a PhD in Strategy/Economics from New York University's Stern School of Business. As an Assistant Professor in the Strategic Management area at the University of Toronto's Rotman School of Management, Professor Grennan taught entrepreneurship in the Commerce program and statistical modeling/methods in the PhD program. He has also taught MBA health care economics at the Indian School of Business and guest lectured to PhDs on modeling methods at numerous universities.

Professor Grennan's research in industrial organization economics touches on public policy and competitive strategy in healthcare markets, with a focus on negotiated pricing, innovation, and adoption of new technologies. His research has been funded by the National Science Foundation and published in leading journals such as the American Economic Review and Management Science. He is a member of the Academy of Management, American Economics Association, and Econometric Society.

We are hiring! Ashley Swanson and I are looking for a fulltime pre or postdoctoral research scholar for NSF funded work at the intersection of health care costs and pricing of medical technology. Please apply or share with anyone who you think might like to spend 13 years in Philly working with us on big health care data sets, machine learning, and bargaining/search/information modeling: https://www.aeaweb.org/joe/listing.php?JOE_ID=201701_111457172

Professor Grennan's research explores questions in economic policy and firm strategy, with empirical applications in the health care context. His focus is on developing new, better data sources—and when necessary new empirical and theoretical models—with two major streams: (1) the interaction between negotiated prices and competition in businesstobusiness markets and (2) how regulatory and competitive forces shape innovation and market outcomes. Much of his recent work looks more closely at how information (or lack thereof) available to market participants affects these policy and strategy decisions.

Ashley Swanson and Matthew Grennan (Under Revision), Transparency and Negotiated Prices: The Value of Information in HospitalSupplier Bargaining.

Abstract: We empirically examine the role of information in bargaining between hospitals and suppliers of medical technologies. Using a large new dataset of hospitals purchase orders, and identification based on both timing of hospitals joining a benchmarking database and on new products entering the market, we find that access to information on purchasing by peer hospitals leads to reductions in prices. Reductions are con centrated among hospitals previously paying relatively high prices and for products purchased in large volumes, and are consistent with hospitals resolving asymmetric information problems. Achieved savings due to information provision amount to 26 percent of potential savings.  

Matthew Grennan and Robert J. Town (Under Review), Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices.

Abstract: We propose a model where new product quality is uncertain, but market participants learn over time. Regulation balances information’s role in reducing consumer risk versus reducing access to innovation. Using new data and variation between EU and US medical device regulations, we document patterns consistent with the model and estimate its parameters. We find: (1) without information from testing, risk would severely inhibit usage; (2) US policy maximizes total surplus in our estimated model while the EU could gain 20 percent with more premarket testing; and (3) more “post market surveillance” could increase surplus 24 percent.   

Matthew Grennan (2014), Bargaining Ability and Competitive Advantage: Empirical Evidence from Medical Devices , Management Science, 60, pp. 30113025.

Abstract: In markets where buyers and suppliers negotiate, supplier costs, buyer willingness to pay, and competition determine only a range of potential prices, leaving the final price dependent on other factors (e.g., negotiating skill), which I call bargaining ability. I use a model of buyer demand and buyer–supplier bargaining, combined with detailed data on prices and quantities at the buyer–supplier relationship level, to estimate firm bargaining abilities in the context of the coronary stent industry where different hospitals (buyers) pay different prices for the exact same product from the same supplier. I estimate that (1) variation in bargaining abilities explains 79% of this price variation, (2) bargaining ability has a large firmspecific component, and (3) changes in the distribution of bargaining abilities over time suggest learning as an important channel influencing bargaining ability.

Matthew Grennan and Mara Lederman (Work In Progress), The Multiproduct Firm Advantage: Evidence From Regulatory Delay in Medical Devices.

Abstract: Theory offers many explanations for why multiproduct firms dominate a variety of industries, but empirically measuring these forces is complicated by the fact that the scale and scope of the firm are typically endogenous decisions. This paper exploits exogenous variation in firm “multiproductness” induced by differing regulatory regimes in the US and EU to empirically measure the size and sources of multiproduct firm advantages in a medical device market. We find that the average multiproduct device firm enjoys spillovers across its product portfolio that increase the value of a new product introduction by 20.1 percent relative to a new single product firm. The available data suggest that at least part of this effect can be explained by: (1) increased information transmission and (2) greater physical design complementarities among products by multiproduct firms. We discuss these findings in the context of recent questions surrounding innovation, barriers to entry, and conflicts of interest in medical devices.   

Matthew Grennan (2013), Price Discrimination and Bargaining: Empirical Evidence from Medical Devices , American Economic Review, 103.

Abstract: Many important issues in businesstobusiness markets involve price discrimination and negotiated prices, situations where theoretical predictions are ambiguous. This paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market. While many phenomena that restrict different prices to different buyers are suggested as ways to decrease hospital costs (e.g., mergers, group purchasing organizations, and transparency), I find that: (i) more uniform pricing works against hospitals by softening competition; and (ii) results depend ultimately on a previously unexplored bargaining effect.  

HCMG 391001 Special Topics: Health Care Entrepreneurship

Past Courses

HCMG391 HC ENTREPRENEURSHIP

Delivering basic health care advances worldwide and continuing to increase lifespan and quality (in an affordable manner) represent some of the major societal challenges of our time. Addressing these challenges will require innovation in both medical technology and the ways in which health services are delivered. Through readings, cases, guest lectures, and your own entrepreneurial work outside of class, we will examine the environment facing prospective health care entrepreneurs: (1) sources of health care innovation; (2) the many "customers" in health care: patients, doctors, hospitals, insurers, and regulators; (3) the powerful established firms with developed clinical and sales expertise; (4) the investing community. Along the way we will develop a framework for thinking about what is different (and what is not) about the challenges of health care entrepreneurship.

HCMG853 MEDICAL DEVICES

Successful medical devices are an amalgamation of creative and innovative thinking, clinical expertise, and engineering knowhow that endures intense regulatory and reimbursement scrutiny. This course will provide a foundation for understanding the nuances of the medical device industry. It will cover topics ranging from device design and discovery, regulatory issues, marketing, reimbursement, management, and strategy. Classroom activities will be supplemented with optional tours of hospitals, research and manufacturing facilities, and handson demonstrations of devices. Though the course is intended primarily for MBA students, it will be open to medical and engineering students as well as to hospital house staff.

NSF Grant “Empirical Analysis of BusinesstoBusiness Bargaining: Evidence from Hospital Input Markets” (CoPI with Ashley Swanson), 2016 Teaching Excellence Award, Toronto Rotman, 2011

We are hiring! Ashley Swanson and I are looking for a fulltime pre or postdoctoral research scholar for NSF funded work at the intersection of health care costs and pricing of medical technology. Please apply or share with anyone who you think might like to spend 13 years in Philly working with us on big health care data sets, machine learning, and bargaining/search/information modeling: https://www.aeaweb.org/joe/listing.php?JOE_ID=201701_111457172

Knowledge @ Wharton

• Is the FDA Too Tough on Medical Device Makers?, Knowledge @ Wharton 06/25/2015
• Dieting in the Digital Age, Knowledge @ Wharton 10/04/2013