Premier has disclosed on its Web site its corporate equity interests, and they show investments by Premier or Premier subsidiaries in more than a dozen companies-far more than the hospital alliance has acknowledged since it pledged greater transparency in its busi-ness practices last year. The disclosures were added to Premier's public Web site, premierinc.com, without fanfare in May, said Gina Clark, a Premier spokeswoman.
Premier's disclosure is in keeping with a code of conduct adopted by the group purchasing industry last year in an effort to remove all potential conflicts of interest from GPO business practices.
Although most of the companies in which San Diego-based Premier has some financial interest do not do business with its group purchasing arm, Premier Purchasing Partners, more than half are "potential vendors," Premier said. What's more, four of the companies are currently vendors that do business with Premier, and apparently represent new equity interests since HHS' inspector general's office conducted a lengthy audit of Premier's practices from July 1, 1999, to June 30, 2000 (March 17, p. 4). The inspector general found that Premier members were not formally informed of the GPO's financial interests in all of the vendors during the review.
The disclosure was posted on the Web site at the same time that Premier also posted some limited financial information-part of Premier's vow to shine more light on its operations after ethicist Kirk Hanson's recommendations upon completing a six-month study last year (July 28, p. 17). Hanson is executive director of the Markkula Center for Applied Ethics at Santa Clara (Calif.) University.
Premier commissioned the ethics study in the wake of charges by small device manufacturers that conflicts of interest and allegedly anticompetitive business practices at Premier and other GPOs severely hampered innovation. In the spring of 2002, the charges spawned the continuing inquiry by the Senate Judiciary Committee's antitrust subcommittee and launched several federal investigations, which also are continuing. Saying it was seeking to stake out the moral high ground, the private, for-profit GPO vowed that henceforth it would publicly disclose financial information and all of its equity interests (Oct. 28, 2002, p. 8).
Sen. Herb Kohl (D-Wis.), the subcommittee's ranking minority member who spearheaded the GPO inquiry, had no comment at this time, his press secretary Lynn Becker said.
Among Hanson's 50 recommendations, which Premier readily adopted, was one that Premier should be held up to at least the same standard of public financial disclosure as its not-for-profit members. Premier, which ended its formal relationship with Hanson when he completed the study a year ago, paid him $250,000 for the study, he said. "There were many more additional vendors at the time I completed my report," Hanson said, although he could not say how many. "I'm glad this has been posted. It looks like the company has followed through on the commitment."
Premier also pledged in July that it likely would make more of its financial information public, including compensation of its top executives and board members, with the close of its fiscal year this month. Clark now says this more complete financial information will not be released until sometime next year because Premier's compensation committee has decided to wait a full calendar year after Hanson's recommendations were made.
GPOs, which are all privately held, historically have been selective and varied in what financial and investment information they share with the public. Premier's direct competitor, Irving, Texas-based VHA, has several so-called "strategic partners" in which VHA has invested that are clearly identified on the cooperative's public Web site, vha.com. VHA has shared this information publicly for 21/2 years, said Lynn Gentry, a VHA spokesman. Beyond the strategic partners, VHA does not hold any equity interests in companies that sell products under contract to its members, he said.
According to the disclosure of corporate equity interests on Premier's site, Premier Purchasing Partners owns equity in two vendors that also have contracts with the GPO: Global Healthcare Exchange, a provider of electronic commerce, and Healthcare Waste Solutions, a provider of waste management services.
Premier also continues to own equity interest in two other vendors with Premier contracts, although the GPO is attempting to liquidate those assets, according to the disclosure statement. Premier has a stake in AmerisourceBergen Corp., the nation's largest drug distributor, as a result of Premier's former 5% stake in Bridge Medical, a purveyor of bar- coding technology, which Ameri-sourceBergen acquired last year. Also, the Premier Medical Partner Fund, a venture capital fund that Premier says it is unwinding, previously owned an unspecified interest in LXN, a company that makes blood glucose-monitoring tests, that was acquired by healthcare giant Johnson & Johnson in late 2001.
Premier's disclosure of corporate equity interest also includes a number of "potential vendors," an ethically gray area, according to Hanson. Such potential vendors-companies that Premier doesn't currently do business with but conceivably could some day-include Visicu, a provider of telemedicine services to hospital intensive-care units, and Med-i-Bank, a firm that offers a credit card for employee copayments and other medical expenses, Clark said. Premier is selling its interest in Med-i-Bank, she said.
Hanson said as a practical matter, differentiating "participating vendors" from "potential vendors" would resolve most conflicts of interest. "If one understands Premier has a policy of not investing in participating vendors," companies hoping to contract with Premier would be discouraged from also seeking it as an investor, he said.
The trade group representing the device manufacturers makes no such distinction. "We think that Premier should not hold any interest in vendors or potential vendors in order to make sure that products are chosen based on their clinical performance and price, and not based on the best interests of any investments Premier might have," said Mark Leahey, executive director of the Medical Device Manufacturers Association in Washington.