Physicians' Ties to IMD Manufacturers Can Ratchet Up Costs

Joe Cantlupe, for HealthLeaders Media , February 23, 2012

If manufacturers determine that a physician is unwilling to switch device models, they can be more aggressive in negotiations, which could result in higher prices for hospitals.  There are other concerns, according to the GAO report. In some instances, it says, device manufacturers have been able to leverage "gag clauses" that have allowed them to keep prices secret.

"Confidentiality clauses barring hospitals from sharing price information make it difficult to inform physicians about device costs and thereby influence their preferences," the GAO report states.

Those secrecy provisions are working to drive up costs, with physicians left in the dark over prices, says Curtis Rooney, president of the Healthcare Supply Chain Association, which represents 15 group purchasing organizations for hospitals, including those of hospital systems and healthcare provider alliances.

"The doc gets trained on the product and the doc never sees the price of the product, but the hospital buys it because it feels the need to keep the physician happy," Rooney tells HealthLeaders Media. "With the confidentiality clauses, the hospital is wearing the blinders, and the hospital can't share the price information with their own physicians."

Sen. Max Baucus, (D-MT) who chairs the Senate Finance Committee, asked for the GAO report, and says he's pushing for increased transparency in the medical device industry because there is too little information available about costs of the implantable devices.

"The more people know about the actual costs of these goods and the options they have, the better they are able to incorporate them into clinical care," Rooney says. "A lot of efficiency is to be had there. If you can't talk about prices, then you are in the dark."

There is something most definitely wrong with that.

Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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