The Senate Judiciary antitrust subcommittee last week recast its net to include four group purchasing organizations that so far have avoided the current that swept Premier and Novation into its investigation.
It was unclear, however, whether the expansion marked a windup or wind down in congressional scrutiny of GPO business practices.
In letters that were distributed Oct. 2, subcommittee Chairman Herbert Kohl (D-Wis.) asked the four GPOs-AmeriNet, Broadlane, Consorta and MedAssets HSCA-to note the reforms already under way at Premier and Novation and to consider implementing some of their own. Kohl asked the four to specifically "consider adopting new business-practice commitments similar to those made by Premier" rather than Novation. Premier, San Diego, and Novation, Irving, Texas, reached separate accords with the subcommittee in August; industry insiders widely agree Premier made the biggest concessions (Aug. 12, p 14).
Kohl noted in his letter that the subcommittee has spent the better part of this year investigating the difficulty innovative medical technologies have in reaching the hospital marketplace. "We learned that GPOs are at the nerve center of our healthcare system," Kohl said.
"They are powerful gatekeepers that can cut off competition and squeeze out innovation," he said. "GPOs determine which medical devices will be used to treat us when we are sick or injured, which manufacturers will survive and prosper-and which ones will fail."
The investigation's expansion to other GPOs indicates the need to impose industrywide reform, according to a congressional source close to the negotiations. "Why should other GPOs be able to do things we consider anticompetitive-programs like sole-source contracts for clinical preference items," the source said. "Why should only Premier be operating under these restrictions?"
For the moment, at least, the letter does not portend any legislative remedies, according to the source. "It's an indication we are continuing to be interested in this issue and seeing that the kind of practices we exposed in our hearing are corrected," the source said.
With one exception, the four letters are almost identical.
But in his letter to Rolling Meadows, Ill.-based Consorta, Kohl observed that an announcement in August that the GPO had struck a five-year, sole-source agreement with Tyco International was "troubling."
An industrywide code of conduct adopted in July by the Health Industry Group Purchasing Association should have "prompted some greater scrutiny at Consorta of the competition implications of entering into such agreements," he said.
"A code of ethics has been developed for adoption by Consorta's board of directors," Sheila Reed, a Consorta spokeswoman, said in an e-mail. "Consorta has been supportive of the senator's effort from the start and we look forward to continuing our dialogue with the senator and his staff."
Officials at the other three GPOs have said all along that they believed their practices were above reproach and last week they said they would repeat that message to Kohl.
"Frankly I was surprised to get a letter like that," said Bud Bowen, president of AmeriNet, St. Louis. "As far as I know, AmeriNet has never been accused by any supplier of engaging in any anticompetitive practices. Our philosophy is to provide choices for our members, particularly in new technologies."
Similarly, officials from Broadlane, San Francisco, and MedAssets, Alpharetta, Ga., said they believe their ethics policies and business practices operate well above the fray.
Broadlane said in a written statement that its internal code of conduct is "among the industry's most stringent" and that it likely exceeds the operating principles recently adopted by Premier and Novation.
"We're comfortable with our code of conduct and its focus on all the major issues raised by Sen. Kohl's office," said John Bardis, president, chairman and chief executive officer of MedAssets.