US Hospital Buying Groups Under Attack

Large hospital purchasing groups in the United States are under attack, as they are increasingly being viewed as discouraging competition among medical suppliers and slowing the adoption of new technologies.

Buying groups such as Novation (Irving, TX, USA) and Premier Inc., (San Diego, CA, USA) two of the largest groups, are paid by medical supply companies to evaluate their products and are allowed to receive fees for this from the manufacturers. The groups then offer these products to hospitals, supposedly at a discounted price that will save the hospital money, particularly if the hospital agrees to buy most or all of its supplies from the same purchasing group.

As a result, the purchasing groups may sell a lot of medical devices or equipment to their hospital customers that are not necessarily the most effective or the latest or the ones preferred by doctors. This has the effect of discouraging hospitals from purchasing products that embody new medical technology and may compel them to use brands they dislike. As the result of recent media coverage, public concern about these practices has mounted, especially because the system appears to discourage competition and the adoption of new medical equipment. The US Senate has been monitoring these developments, following a subcommittee investigation last April.

Novation has now announced that it will change its policies to make it easier for new medical products to reach hospitals more quickly. The changes include limiting the amount of money the company accepts from medical supply companies, shortening the length of its contracts, and soliciting new bids for existing contracts as improved medical devices are available. Novation has also agreed to limit stock holdings by its employees in the companies that have contracts with Novation.

Premier has announced a similar reform plan, and has also endorsed the new Code of Conduct adopted by the healthcare group purchasing industry at the request of the US Senate subcommittee. "The Code underscores the commitment of our organizations to help healthcare providers deliver the best in quality healthcare at a reasonable cost, and to do so in a way that is ethical and fair to all participants in the healthcare marketplace,” said Richard A. Norling, chairman and CEO of Premier.




Related Links:
Premier Inc.
Novation