DOJ accepts hospitals' joint purchasing agreement

The U.S. Department of Justice has decided to offer no challenge to a proposal by two hospitals to enter into an exclusive joint purchasing agreement for some of their medical and surgical supplies.

The two organizations, Memorial Health Inc. and St. Joseph's/Candler Health System, both own acute tertiary care hospitals in Savanna, GA. Both had proposed to work together to evaluate medical and surgical products, choose suppliers, then negotiate prices and terms with those suppliers. However, before moving ahead with the plan, they asked the DOJ to review it to determine whether it was kosher.

The DOJ has decided that the agreement meets the "antitrust safety zone" requirements included in both its and and the FTC's policies on the matter. The safety zone requires that the cost of products purchased through the joint agreement account for less than 20 percent of the total revenue of all products and services bought by each participant. The safety zone also requires that products bought under the agreement represent less than 35 percent of a given supplier's sales of that product in a market. The two organizations have said that they'll stick to these terms.

To learn more about the DOJ's decision:
- read this DOJ press release

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