Medtronic canceled five cardiovascular and orthopedic contracts with Novation, the group purchasing organization owned by VHA and the University HealthSystem Consortium. The move prompted a public rebuke from Novation and an apparent scramble by the purchaser to offset the canceled contracts with alternative services. The canceled contracts covered Novation purchases that totaled roughly $2 billion, according to Novation.
Medtronic cancels five Novation contracts
Novation will assist members through the end of the year with cardiac and orthopedic device negotiations, effective immediately, the group purchaser said.
The group purchaser singled out contracts that limit hospitals' ability to share pricing information with consultants or GPOs as a potential risk when manufacturers negotiate directly with buyers. However, Novation acknowledged it was unclear whether Medtronic employs such clauses.
Medtronic spokesman Christopher Garland declined to comment on the use of the clauses and said the company had no comment beyond an official statement. “With an eye on removing costs from the healthcare system, Medtronic believes that we will be best able to address the varied needs of our customers by managing our business interactions and relationships locally instead of through Novation,” according to the statement.
Sixteen not-for-profit hospitals and academic medical centers stated extreme disappointment with the move in a letter to Medtronic's chairman and CEO, Novation said.
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