Medical Device Manufacturers Association (MDMA) Claims Hospitals and Clinical Laboratories Don’t Get Best Pricing from GPO Contracts

Researchers Offer Evidence that Hospitals and Pathology Labs Often Negotiate Lower Prices on Their Own

Even as Congress shines a spotlight on the business activities of group purchasing organizations (GPOs), the Medical Device Manufacturers Association (MDMA) has made public a research study it initiated about GPO contract practices. This report says an inherent conflict of interest prevents GPOs from obtaining the lowest possible prices for its hospital and clinical pathology laboratory members.

On December 3rd, Dark Daily reported on the report published by the General Accountability Office (GAO) in response to a Congressional directive. The GAO determined that, during 2008, sales made under GPO contracts by members, including hospitals, clinical laboratories, and other types of healthcare providers, totaled $109 billion.

The six GPOs studied by the GAO earned a bit more than $2 billion in revenue for 2008. Of this, $1.7 billion came from administrative fees generated by contract purchases. The balance of $320 million was from fees generated by supply chain outsources, revenue cycle management, and consulting.