In accordance with what Mike and Ed have previously pointed out on healthcare alliances, I, too, am utterly dismayed at the allegations of nefarious goings-on within these organizations. The senators assert that the “buying process is opaque and unfair.” Nothing could be further from the truth. If only other industries and businesses were as ethical and transparent as hospital collaboratives. Bernie Madoff, anyone?
In 2005 the industry adopted a universal code of conduct, based on the comprehensive code created by Premier three years prior, to ensure all healthcare alliances are conducting themselves with best ethical and business practices. In fact, Senator Kohl even commented that Premier has set “the gold standard” among group purchasing organizations regarding its transparency and commitment to ethical conduct. Information on this code and its six core principles are freely available to everyone through a public Web site. The largest group purchasing organizations all belong to this one stand-alone, single-purpose initiative. Participation is based on the commitment to follow six core principles of ethics and business conduct, which are reviewed, tracked, and reported to the public. These reports have been open to all for review since early 2006. The question of how healthcare alliances conducted business was brought up years ago yet nothing reprehensible was found then nor now.
Healthcare cooperatives provide documented results. There is no question about this. Several independent studies have proven this time and time again. One study released in April by Dr. Eugene S. Schneller found that healthcare alliances “save the U.S. healthcare industry $36 billion annually in price savings plus more than $2 billion in savings associated with human resources uncommitted to the purchasing process.” Another, released in July by Dr. David Goldenberg and Roland King, documented the same number and found that it’s not just isolated supply chain cost savings improving the industry as a whole, but also supplemental benefits of larger programs and initiatives leading “to better use of staff and lower total costs.”
If only every industry were as transparent and beneficial to hospitals as healthcare alliances are. Let’s look at the pharmaceutical industry for a moment. While it strives to create lifesaving drugs, a September 2 article from The New York Times discusses how the Senate’s Special Committee on Aging obtained an 88-page marketing plan from Forest Laboratories for its antidepressant, Lexapro. While the manufacturer claims the expensive branded drug is superior to its competition, the FDA views the generic versions as equally efficacious. The Forest Lexapro 2004 marketing plan budgeted $36 million for “lunch and learn” meals in doctors’ offices and almost $35 million to compensate doctors lecturing on its behalf to other doctors. According to the document, “these meetings may be large-scale dinner programs.” Are these educational talks or influential, “tainted” meetings?
Senator Herb Kohl is no surprise, on the case and will investigate to determine whether “the line between medical education and marketing [is] blurred.” Paying doctors to prescribe certain drugs is always illegal, but the practice becomes more sordid when there are clearly lower cost therapeutic equivalents available that could save money for our hospitals, patients and the nation.
In addition to eliminating unnecessary supply chain costs, healthcare collaboratives exchange information across their members. This includes sharing knowledge on clinical efficacy, particularly where savings can be achieved. It’s unbelievable to me the senators would want to aim their loaded guns at imaginary targets (hospital cooperatives which are helping to save money and improve quality across the industry and the nation), rather than looking for solutions to the real issues plaguing our system such as rational reimbursement, the primary care physician shortage and fee-for-service, to name a few.
Kester Freeman blogs regularly at Action for Better Healthcare.