Nation's Largest Hospitals Say Medical Device Group's Proposal on Health Care Group Purchasing Organizations Would Drive Health

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 Nation's Largest Hospitals Say Medical Device Group's Proposal on Health Care Group Purchasing Organizations Would Drive Health Care Costs Higher


 

Letter to MDMA chairman from VHA member organizations challenges findings in recent report, says small hospitals “would lose access to the critical help their GPOs provide in monitoring and controlling supply costs”

 

Irving, Texas (Dec. 14, 2010) – Fourteen of the nation’s largest hospital systems sent a letter to the chairman of the Medical Device Manufacturers Association today asserting that the trade group’s position on health care group purchasing organizations is “unbelievable,” and would drive the costs of delivering health care across the country higher. The hospital letter profoundly disputes findings in a recent device association report, saying that health care costs would rise without the involvement of GPOs, not fall as the industry group suggests.

 

“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,” the hospitals wrote. The group of fourteen hospitals emphasized the negative impact the MDMA proposal would have on smaller hospitals, saying that many “would lose access to the critical help their GPOs provide in monitoring and controlling supply costs.”

 

The major health care systems that sent the letter to MDMA Chairman Eamonn P. Hobbs, include: Allina Hospitals & Clinics, Minneapolis; Baptist Memorial Health Care Corp, Memphis, Tenn.; BJC HealthCare, St. Louis; Clarian Health, Indianapolis; Mayo Clinic, Rochester, Minn.; Memorial Hermann Healthcare System, Houston; New York – Presbyterian Hospital, New York; Novant Health, Winston-Salem, N.C.; OhioHealth, Columbus, Ohio; Premier Health Partners, Dayton, Ohio; Providence Health and Services, Renton, Wash.; Spectrum Health, Grand Rapids, Mich.; Sutter Health, Sacramento Calif.; and Yale New Haven Health System, New Haven, Conn.

 

All of the systems are members of VHA Inc., the national health care network, and belong to VHA’s Large IDN Supply Network, or LISN, a select group that works with VHA on key supply chain initiatives.

 

In writing the letter, the health care systems noted that they employ thousands of people and serve urban and rural communities with patients spanning the economic spectrum – including Medicare and Medicaid beneficiaries and those without insurance. The systems also pointed to the billions of dollars they spend annually on the medical supplies and devices used in the daily care for patients.

 

“Make no mistake,” the letter’s authors noted, “our own internal purchasing teams are savvy professionals who understand the complexities of the health care supply marketplace. Yet every

day, our teams voluntarily turn to VHA and its supply contracting company Novation because these organizations help us find the best products for the best prices.”

 

The authors said that part of the impetus for the high-level letter was a need to stress the changes underfoot at all hospitals following the passage of federal health reform and the support hospitals receive from health care GPOs on cost and quality initiatives. “Neither the health care community nor the country as a whole can afford the type of disruption and increased cost that your organization [MDMA] is advocating,” they wrote.

 

In addition to sending the letter to chairman Hobbs, the hospitals sent copies to Senators Patrick Leahy, Charles Grassley, Herb Kohl, Bob Corker, Max Baucus and Orrin Hatch.

 

A full copy of the letter can be accessed at VHA’s News Room

 

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About VHA -- VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. In 2009, VHA delivered record savings and value of $1.47 billion to members. Formed in 1977, VHA serves more than 1,350 hospitals and more than 30,000 non-acute care providers nationwide, coordinating delivery of its programs and services through 16 regional offices. VHA has been listed as one of the best places to work in health care by Modern Healthcare since 2008 and one of the best places to work in IT by Computer World since 2007.

 

 

December 13, 2010

 

Eamonn P. Hobbs

Chairman of the Board

Medical Device Manufacturers Association

1350 I Street NW

Suite 540

Washington, DC 20005

 

Dear Mr. Hobbs:

 

We are writing to express our strong disagreement with the assertions contained in the Medical Device Manufacturers Association’s (MDMA’s) recent report on health care group purchasing organizations (GPOs). Your study asserts that hospitals would universally save money by NOT using GPOs. Given our knowledge of health care and the health care supply chain we work with every day, we find this conclusion to be completely unbelievable.

 

Our organizations are some of the largest health care organizations in America, as well as the largest members of VHA Inc., a hospital-owned cooperative. We employ thousands of people, serving urban and rural communities with patients spanning the economic spectrum—including those enrolled in Medicare and Medicaid, and those without insurance. We treat every imaginable health condition, and in doing so we spend billions annually on the medical supplies and devices that our patients need.

 

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. Further, many hospitals—especially smaller ones—and other healthcare organizations simply wouldn’t have the resources necessary to fund participation in a GPO, and as a consequence would lose access to the critical help their GPOs provide in monitoring and controlling supply costs. 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.

 

Make no mistake, our own internal purchasing teams are savvy professionals who understand the complexities of the health care supply marketplace. Yet every day, our teams voluntarily turn to VHA and its supply contracting company Novation because these organizations help us find the best products for the best prices. But large health care systems like ours are not the only beneficiaries of GPOs. Smaller hospitals find enormous benefit as well, particularly since they often lack the in-house resources and purchasing expertise our organizations have developed to manage the enormous scope of work that we tackle every day.

 

As we and other hospitals across the country brace for the impact of federal health reform, we wanted to be sure you and your members appreciate our perspective about our support of health care group purchasing organizations. Like the vast majority of American hospitals, we use our GPO every day to save money on medical supplies and devices, and in the coming years the savings our GPO provides will be even more crucial to helping us deliver high-quality, low-cost health care to the communities we serve.

 

Sincerely,

 

Cheryl J. Harelstad

Vice President, Supply Chain Management

Allina Hospitals & Clinics

Minneapolis, Minnesota

 

John Finger

System Director, Corporate Supply Chain Operations

Baptist Memorial Health Care Corporation

Memphis, Tennessee

 

Nancy LeMaster

Vice President, Supply Chain Operations

BJC HealthCare

St. Louis, Missouri

 

Joe Arruda

Vice President, Supply Chain Operations

Clarian Health Partners Inc.

Indianapolis, Indiana

 

James R. Francis

Chair, Supply Chain Management

Mayo Clinic

Rochester, Minnesota

 

Dan Humphrey

System Executive and Supply Chain Services

Memorial Hermann Healthcare System

Houston, Texas

 

Jack Fleischer

Vice President, Procurement & Strategic Sourcing

New York-Presbyterian Hospital

New York, New York

 

Tony W. Johnson

Senior Vice President, Chief Supply Chain Officer

Novant Health

Winston-Salem, North Carolina

 

J. Robert Boswell

Vice President, Supply Chain Operations

OhioHealth

Columbus, Ohio

 

Nick Lair

Vice President and Chief Purchasing Officer

Premier Health Partners

Dayton, Ohio

 

Dave Hunter

Vice President, Supply Chain Management

Providence Health & Services

Renton, Washington

 

Christopher Baskel

System Director, Supply Chain

Spectrum Health

Grand Rapids, Michigan

 

Dennis A. Maher

Vice President, Supply Chain Services

Sutter Health

Sacramento, California

 

Pamela L. Scagliarini

System Director, Supply Chain Management

Yale New Haven Health System

New Haven, Connecticut

 

 

 

cc: Sen. Max Baucus

Sen. Bob Corker

Sen. Charles E. Grassley

Sen. Orrin G. Hatch

Sen. Herb Kohl

Sen. Patrick J. Leahy

 

 

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