Topic: Patient Mobility and Differentiation of Medical Quality - Benign and Vicious Cycles in the Market of Cardiovascular Medical Services

Speaker: Associate Professor Tao Xuezhen from the School of Business, Shanghai University of Finance and Economics

Host: Associate Professor Luan Mengna from RIEM

Time: 10:00-11:30 on May 12, 2026

Location: Conference Room 1211, Gezhi Building, Liulin Campus

Speaker Introduction:

Tao Xuezhen, Associate Professor of Industrial Economics at the School of Business, Shanghai University of Finance and Economics. His research areas cover empirical estimation of product innovation structure and anti-monopoly analysis under incomplete information settings. Research topics include centralized procurement policy evaluation in the medical device field, evaluation of product innovation transmission efficiency, and the impact of cross regional medical product innovation. He also studies the signal equilibrium mechanism of pricing competition and Cournot competition among enterprises under incomplete information settings, as well as the impact of AI market competition on innovation and labor markets. His academic achievements have been published in multiple international journals and he has presided over the completion of the National Natural Science Foundation of China Youth Fund.

Content Summary:

This study constructs and estimates a dynamic structural model about patient mobility and hospital quality investment. The research object is the heart stent market in Taiwan, China, China. On the demand side, the model adopts a two-layer nested Logit to depict the triage choices of patients between different regions in Taiwan and between hospital product combinations; On the supply side, hospitals choose the product portfolio width and pricing of drug-eluting stents (DES) under Markov perfect equilibrium, and their investment return depends on the market size changes brought about by patient mobility. The counterfactual analysis yielded the following two main findings:

Firstly, if cross regional medical mobility is prohibited, consumer surplus will decrease by 31%. This loss is almost entirely due to the inability of patients to enter hospitals that are more suitable for themselves, rather than the weakening of price or quality competition constraints after the weakening of cross regional mobility; Moreover, this loss has a particularly significant impact on low-income patients. Although the competitive transmission effect brought about by patient mobility is weak, it will promote regional differentiation through market size channels: regions with net inflow of patients can share the sunk costs of upgrading investments with more patients, while regions with net outflow cannot do so, thus forming a self reinforcing "virtuous cycle" and "vicious cycle".

Secondly, implementing interventions solely on the demand side or supply side would bring about significant trade-offs: while reducing actual travel friction can improve overall welfare, it may exacerbate the geographic concentration of medical resources and patients; Weakening patients' local preferences does not necessarily automatically increase welfare; The transmission effect of supply side upgrade subsidies on patients is relatively limited. The preliminary exploration of cross regional medical additional co payment and targeted DES reimbursement reform suggests that changing policies that simultaneously incentivize patients and hospital investment may be more likely to alleviate the above trade-offs, but the quantitative evidence on the design of these policies is still preliminary.

The core data used in this study is medical insurance settlement data, provided by relevant institutions, of which one author is a member.