Connecticut Attorney General Richard Blumenthal is working with federal investigators to examine whether Yale-New Haven Hospital and other Connecticut not-for-profit hospitals are overcharging government agencies for medical supplies.
Blumenthal's investigation focuses on Novation of Irving, Texas, which coordinates purchasing of medical supplies such as sutures, rubber gloves and X-ray machines for Yale-New Haven Hospital and other not-for-profit hospitals in the state.
The U.S. Department of Justice is investigating whether hospitals that do business with Novation are overcharging Medicare and other government agencies for medical supplies.
In Connecticut, Novation sells to hospitals that account for 67% of the state's hospital beds, Blumenthal said.
"Our priority is to assure that patients receive the best quality medical care and equipment at fair and affordable prices and that taxpayers receive the full benefit of discounts or rebates or other payments made in connection with purchases of medical supplies," Blumenthal said.
Authorities are investigating whether hospitals fail to report rebates, discounts or other payments, leading to higher charges for Medicare and Medicaid.
Blumenthal's probe, which he said has been going on for about a year, also involves whether Novation uses its market strength to favor certain medical suppliers and block competition from smaller manufacturers.
Novation said on its Web site that Yale-New Haven Hospital saved $1.7 million using the company last year. Group purchasing is good for health care and hospitals that work with Novation, the company said.
Blumenthal's investigation also concerns possible conflicts of interest involving hospital executives who have ties to Novation and related companies, including top executives at Yale-New Haven.
Blumenthal did not name the executives.
"They may be on both sides of the sale transaction involving Novation and their hospital," Blumenthal said. "At the very least, the appearance concerns us."
Vin Petrini, a spokesman for Yale-New Haven Hospital, said the hospital is "entirely unaware of any action by the AG office."
"Since Yale-New Haven has no role whatsoever in decisions made at Novation, there is absolutely no conflict of interest that is apparent," he said.
Other Connecticut hospitals affiliated with Novation include Hartford and Stamford hospitals.