Se­crecy ham­pers

Congress needs to act to in­crease med­i­cal-de­vice trans­parency

Modern Healthcare - - OPINIONS COMMENTARY - By Cur­tis Rooney

The U.S. Gov­ern­ment Ac­count­abil­ity Of­fice re­cently con­firmed what health­care group pur­chas­ing or­ga­ni­za­tions, hos­pi­tals and any­one on the front lines of pa­tient care and health­care cost con­tain­ment see ev­ery day: Med­i­cal de­vice pric­ing se­crecy de­creases com­pe­ti­tion, lim­its the abil­ity of hos­pi­tals and their GPO part­ners to ef­fec­tively ne­go­ti­ate for med­i­cal prod­ucts and ser­vices, and ar­ti­fi­cially drives up health­care costs, leav­ing hos­pi­tals, pa­tients Medi­care and Amer­i­can tax­pay­ers to foot the bill.

In its new re­port, Lack of Price Trans­parency May Ham­per Hos­pi­tals’ Abil­ity to Be Pru­dent Pur­chasers of Im­plantable Med­i­cal De­vices, (bit.ly/ar7dec) the GAO ex­am­ined pric­ing in­for­ma­tion for ex­pen­sive im­plantable med­i­cal de­vices, or IMDS, and de­ter­mined that there was sub­stan­tial vari­a­tion in the prices hos­pi­tals paid for the same de­vices, and that pric­ing se­crecy limited the abil­ity of hos­pi­tals to ne­go­ti­ate for the best price.

Med­i­cal de­vice con­trac­tual con­fi­den­tial­ity agree­ments, so-called “gag clauses,” pre­vent hos­pi­tals from shar­ing data and val­i­dat­ing that they are re­ceiv­ing a fair price on the prod­ucts they buy. Con­tracts be­tween man­u­fac­tur-

“Gag clauses” pre­vent hos­pi­tals from shar­ing data and val­i­dat­ing they are re­ceiv­ing a fair price.

ers and hos­pi­tals of­ten for­bid dis­clo­sure of prices, even to doc­tors, which makes it dif­fi­cult to get physi­cians the in­for­ma­tion they need to con­sider cost when mak­ing de­ci­sions about de­vices. As a re­sult, some hos­pi­tals un­nec­es­sar­ily pay thou­sands of dol­lars more than oth­ers for high-cost med­i­cal de­vices such as de­fib­ril­la­tors, stents and hip re­place­ments.

The price vari­a­tion in what hos­pi­tals paid for the same type of de­vice was stark. For ex­am­ple, one hospi­tal sur­veyed paid $8,723 more than an­other for an iden­ti­cal model of a de­vice that reg­u­lates heart rhythm, which typ­i­cally costs hos­pi­tals be­tween $16,445 and $19,007. One hospi­tal re­ported spend­ing about $4,500 for a spe­cific pri­mary to­tal hip con­struct, while an­other paid about $8,000 for the same de­vice con­struct, or 78% more. In an­other in­stance, one hospi­tal paid about $5,200 for a pri­mary to­tal knee con­struct, while an­other hospi­tal paid about $9,500 for the same pro­ce­dure, or 83% more.

The prob­lem is even more ex­treme in small and ru­ral mar­kets, where com­mu­nity hos­pi­tals of­ten lack bar­gain­ing power in ne­go­ti­a­tions with be­he­moth de­vice cor­po­ra­tions. With­out GPO bench­mark­ing, hos­pi­tals are of­ten in the dark while ne­go­ti­at­ing with de­vice man­u­fac­tur­ers, and man­u­fac­tur­ers are able to charge what­ever lo­cal mar­kets will bear.

In an en­vi­ron­ment of in­creas­ing health­care

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