Physician influence on hospital purchasing could cause hospitals to pay more for some implantable medical devices, according to a report from the Government Accountability Office (PDF).

The GAO analyzed the prices that 31 hospitals paid for cardiac devices and found a “substantial variation” in the lowest and highest prices that a hospital paid and noted that physicians with strong preferences may limit a hospital's ability to receive volume discounts.

The data were included in a GAO report released Feb. 3 about Medicare expenditures for implantable medical device procedures and the overall lack of transparency in current purchasing practices at hospitals.

“The lack of price transparency for the [implantable medical devices] we examined makes it difficult to know whether hospitals are achieving the best device prices,” the GAO said in the report. “Physician preferences for particular manufacturer's devices and models may further complicate hospitals' bargaining power.”

However, the report said that without available data to compare the costs of certain devices, it is difficult for hospitals to educate physicians about how preference can impact pricing.

“Some GPOs noted that, despite the financial impact of physician preference, hospitals are likely to accommodate physicians' IMD preferences in order to retain patient referrals to their facilities,” the report said. “…If manufacturers determine that a physician is unwilling to switch device models, they can be more aggressive in negotiations, which could result in higher prices for hospitals.”

For the report, the GAO analyzed inpatient and outpatient Medicare claims for primary total knee implants, primary total hip implants, coronary drug-eluting stents, automated implantable cardioverter defibrillators and cardiac resynchronization therapy defibrillators from fiscal 2004 to fiscal 2009.

Of the 31 hospitals that provided pricing information about automated implantable cardioverter defibrillators to the GAO, the difference between the lowest and highest paying hospital for one product was $6,844 and the difference in price for another model was $8,723. The median prices for all four models ranged from $16,445 to $19,007.

The difference in pricing for the five models of drug-eluting coronary stents that the GAO analyzed ranged from $309 to $828 and the median prices were between between $1,700 and $1,800.

The report noted that several hospitals and GPOs did not provide detailed information about prices, citing the impact of rebates and discounts on pricing and confidentiality clauses between hospitals and manufacturers.

The Advanced Medical Technology Association said in a statement that it would be inappropriate to make public policy conclusions from the report.

“It is also important to note that complex and highly competitive contract negotiations for medical device prices include several important factors, including the number of competitors in the marketplace, a particular hospital's volume of business in a particular procedure and the volume of other products sold to that hospital by a manufacturer,” said David Nexon, AdvaMed's senior executive vice president in a statement.

In the analysis of Medicare expenditures from 2004 to 2009, the GAO found that outpatient expenditures for implantable device procedures rose 24.1% each year, from $1.0 billion in 2004 to $2.9 billion in 2009 while inpatient expenditures for implantable device procedures increased 2.4% each year, from $15.1 billion in 2004 to $17.0 billion in 2009.

Medicare expenditures for orthopedic procedures rose 8.1% each year, from $6.1 billion in 2004 to $9.0 billion in 2009, the GAO said. Cardiac procedure expenditures rose only 1.2% per year, from $9.8 billion in 2004 to $10.3 billion in 2009.