Procuring medical devices: evidence from Italian public tenders

The public procurement of medical devices is increasingly relying on auction mechanisms to move toward more transparent procedures and to promote competition between suppliers in a market where the quality of the products matters enormously. An improper auction design could lead to inefficient outcomes, such as a market with higher-than-optimal prices, or lower-than-optimal quality. Based on Italian public tender data, we present new evidence on the performance of the public tenders to procure orthopaedic prosthesis for hips, knees and shoulders. Focusing on three main outcomes, the number of participants, the presence of a single firm bidding and the winning rebate, for the first time we describe how features related to the tender, hospital, region and bidders' competition all contribute to explain the functioning of the procurement auctions. The evidence we obtain can meaningfully help policymakers in designing and implementing better public procurement systems.