: Hospital buyers of medical devices contract with manufacturers with market
power that sell differentiated products. The medical staff strongly influences hospitals’
choice of devices. Sellers have sought to limit disclosure of transaction prices. Policy-
makers have proposed legislation mandating disclosure, in the interest of greater transpar-
ency. We discuss why a manufacturer might charge different prices to different hospitals,
the role that secrecy plays, and the consequences of secrecy versus disclosure. We argue
that hospital-physician relationships are key to understanding what manufacturers gain
from price discrimination. Price disclosure can catalyze a restructuring of those relation-
ships, which, in turn, can improve hospital bargaining. [Health Affairs 27, no. 6 (2008):
1544–1553; 10.1377/hlthaff.27.6.1544]