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FOR IMMEDIATE RELEASE
Contact: Carolyn Hickey
Phone: 703-243-9262

Arlington, VA (September 14, 2004) - Our industry continues to engage in vigorous examination of ways to improve and strengthen our Code of Conduct certification and compliance program. We believe private sector compliance programs are the most efficient and effective way to advance best practices in the health care procurement and supply chain industry and ultimately strengthens our health care system, said the Health Industry Group Purchasing Association (HIGPA) President and CEO, Robert Betz, Ph.D., in testimony to the U.S. Senate Judiciary Antitrust Subcommittee for today’s hearing on hospital group purchasing.

HIGPA stressed three points in its oral and written testimonies to the Subcommittee. Highlights of which include the following:

1. Industry’s adoption of a Code of Conduct in 2002 which seeks to promote competition and innovation; eliminates the potential for conflicts of interest; establishes guidelines for the use of contracting tools; provides greater transparency by requiring full disclosure to health care provider members of all vendor payments and ultimately provides greater accountability to hospitals and other providers. The adoption and implementation of the Code underscores the group purchasing industry’s commitment to improving health care and advancing technological innovation at the most manageable cost to providers of care and their patients.
2. After a comprehensive examination of the industry by the U.S. Federal Trade Commission and U.S. Department of Justice, the agencies concluded in their July 2004 joint report on health care competition and policy titled, "Improving Health Care: A Dose of Competition," they have ample tools to assure competition in the GPO industry. Additionally, the report states Health Care Statement Seven, the policy statement that governs GPOs, provides the FTC and DOJ with the ability to review group purchasing organizations’ business practices at any point. Moreover, the FTC has demonstrated a preference for self-regulation in industries that offer self-compliance systems. It is for these reasons HIGPA believes continued self-regulation to be the viable compliance mechanism for the health care group purchasing industry.
3. Through HIGPA, the industry reiterates the points made in its September 2, 2004 letter to the Subcommittee and strongly opposes any effort to impose new restrictions on the group purchasing industry that are unnecessary and harmful to our health care provider members. The Subcommittee’s consideration of such legislation would ultimately restrain health care providers’ ability to control one of the few budget items it can - supply costs. As always, the industry offers to engage in productive dialogue with the Subcommittee to explore non-legislative approaches for assuring the changes that have been made remain in place, and the industry is always vigilant in adapting its practices as the market continues to evolve.

In closing, Dr. Betz stated, "Given that group purchasing empowers providers to negotiate discounts from suppliers at virtually no cost to those providers, GPOs are the real untold success story in health care. Providers, payers and ultimately, consumers will pay more for products and services purchased through GPOs if their ability to negotiate on behalf of their providers is curtailed by additional restrictions on the GPO contracting processes. Imposing such restrictions as taking away the essential contracting tools available to GPOs to get the best deals on products for their members would tilt the marketplace in favor of manufacturers and have a negative impact on pricing, discounts, and savings that GPOs attain for their member providers.

"I urge members of this Subcommittee not to weaken a crucial mechanism that helps providers reduce their purchasing costs which allows them to commit more financial resources to patient care."

HIGPA is a chartered trade association of over 150 health care purchasing and supply chain organizations. HIGPA's Industry Members include purchasing groups, associations, and health care provider alliances. HIGPA's Trading Partner members include many of the world's leading health care product manufacturers, distributors, wholesalers and related suppliers. According to a recent study conducted by a former principal analyst at the Congressional Budget Office, hospitals save patients over $30 billion each year by purchasing products through group contracts.

To learn more about HIGPA or the group purchasing industry, visit www.higpa.org or call 703-243-9262.

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