Hospitals Blast Report that GPOs Drive up Healthcare Costs

Jeff Elliott, for HealthLeaders Media , December 27, 2010

Hospitals that sent the most recent letter, including Allina Hospitals & Clinics in Minneapolis, Baptist Memorial Health Care Corp. of Memphis, Tenn., and St. Louis' BJC HealthCare, refuted study results, calling MDMA's position "unbelievable."

"Our decades of experience negotiating with manufacturers tell us that it is implausible to think device manufacturers would voluntarily reduce prices for any sustained period of time if GPOs were funded directly by hospitals, as your report suggests," reads the letter. "Contrary to your report's assertion, changing the current GPO funding mechanism would mean additional costs for hospitals and other health care organizations, thus driving healthcare expenditures even higher. Neither the healthcare community nor the country as a whole can afford the type of disruption and increased cost that your organization is advocating."

The long-standing dispute has boiled over at different times over the years, with each side appealing to Congress and the general public in support of their activities. MDMA has long been seeking a repeal of safe harbor provisions granted to GPOs in the1986 Social Security Act effectively making it illegal for GPOs to collect money from vendors.

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