A group of large hospital systems has sent a
letter to the Medical Device Manufacturers Association (PDF) disputing the findings of a recent study put out by the organization.
The study, released this past October,
concluded that group purchasing organizations' contracting practices drive up the cost of medical products and, ultimately, the costs of care to consumers and payers. The authors asserted that a reduction of up to $37.5 billion in healthcare costs could be realized if Congress repeals the safe harbor law, which allows GPOs to collect a percentage of the dollars suppliers earn by selling goods to hospitals through GPO-negotiated contracts. The arrangement, argued the authors, doesn't incentivize GPOs to negotiate the lowest price on contracted goods. The authors argued that hospital membership dues should be used as an alternative source of funding for GPOs.
But in the letter to MDMA Board Chairman Eamonn Hobbs, 14 hospital systems rejected the study's conclusions, calling them “completely unbelievable.”
“Our decades of experience negotiating with manufacturers tell us that it is implausible to think device manufacturers would voluntarily reduce prices for any sustained period of time if GPOs were funded directly by hospitals, as your report suggests,” the providers said in their letter. A copy of the letter was sent to Sen. Chuck Grassley (R-Iowa), who is leading an effort to investigate GPOs' compensation model. Allina Hospitals & Clinics, Minneapolis; Baptist Memorial Health Care, Memphis; Mayo Clinic, Rochester, Minn.; and Sutter Health, Sacramento, Calif., were among the 14 hospitals systems that sent the letter. All of the providers are members of VHA, the parent company of the GPO Novation.
