Senate Hearing Update
The Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights held three hearings regarding the practices of Group Purchasing Organizations (GPOs) and Dominant Medical suppliers. As a result of these hearings, most of the major GPOs, including Premier and Novation, created Codes of Conduct to attempt to reduce anticompetitive conduct relating to clinical preference products. As part of these investigations, the General Accounting Office published two reports. The first report found that GPOs do not always offer hospitals lower prices. The second GAO report addressed certain anticompetitive contracting practices used by GPOs including sole source contracts and bundling arrangements and discussed the various Codes of Conduct implemented by the GPOs to correct these practices. Furthermore, the Department of Health and Human Services Office of the Inspector General recently published a report that showed of the $1.8 Billion in fees that 3 GPOs collected over a four-year period, $1.3 Billion exceeded their operating expenses. Of this $1.3 Billion in excessive fees, the GPO kept over $400 Million for venture capital endeavors as well as reserves. The remaining $898 Million dollars were returned to hospitals. Of this, $255 Million was returned to just 21 hospitals. None of the hospitals correctly reported the fees on their cost reports to Medicare. In addition, in 2004, Senator Kohl and Senator Dewine introduced The 2004 Medical Device Competition Act to promote competition and innovation in the healthcare marketplace. The Senate hearing testimonies, government reports, and the proposed bill are posted below. We offer this information to further Masimo’s goals of improving patient safety, improving patient care and reducing the cost of care.
- Review of Revenue from Vendors at Three Group Purchasing Organizations and Their Members
- Medical Device Competition Act of 2004
- Statement of Senator Kohl in Support of the Medical Device Competition Act of 2004
September 14, 2004
"Hospital Group Purchasing: How to Maintain Innovation and Cost Savings"(view video)
Subcommittee on Antitrust, Competition Policy and Consumer Rights
- Opening Statement. The Honorable Mike DeWine, United States Senator, Ohio
- Testimony of David A. Balto, Esquire, Robins, Kaplan, Miller & Ciresi LLP
- Testimony of Mr. Joe E. Kiani, Founder & CEO of Masimo Corporation
- Testimony of Dr. Robert Betz, President and CEO, Health Industry Group Purchasing Association
- Statement of The Honorable Herb Kohl, United States Senator, Wisconsin
- Statement of The Honorable Patrick Leahy, United States Senator, Vermont
Written statement by other interested parties:
July 16, 2003
"Hospital Group Purchasing: Has the Market Become More Open to Competition?"
Subcommittee on Antitrust, Competition Policy and Consumer Rights
- Testimony of Mr. Mark Mckenna, President Novation
- Testimony of Mr. Richard Norling, Chairman and CEO Premier, Inc
- Testimony of Mr. Said Hilal, President and Chief Executive Officer Applied Medical Resources
- Testimony of Mr. Thomas Brown, Executive Vice President Biotronik, Inc
- Testimony of Mr. Gary Heiman, President and CEO Standard Textile Co
- Testimony of Mr. Lynn Everard, Hospital Purchasing Consultant
- Testimony of Ms. Elizabeth Weatherman, Vice Chair National Venture Capital Association
- Statement of The Honorable Orrin Hatch, United States Senator Utah
- Statement of The Honorable Patrick Leahy, United States Senator Vermont
- GAO Report
August 8, 2002
August 5, 2002
- Premier's Proposed Business Practice Commitments
- Senators Kohl and DeWine's Response to Premier's Proposal
- MDMA Applauds the Senate's Progress in Negotiating a GPO Code of Conduct
July 19, 2002
- Rebuttal Cover Letter to Senator Kohl
- Exhibit A
- Masimo SET: Breakthrough Technology
- Masimo SET: Breakthrough Technology Bibliography
- Literature Summary of Published Studies Comparing Masimo to Nellcor
- Masimo's Analysis of Nellcor Published Bibliography of Clinical Studies
and Related Publications - Summary of Nellcor's Bibliography
- List of Nellcor Internal Studies That Favor Masimo SET
- Dr. Goldstein's Letter to Senator Kohl
April 30, 2002
- US Senate Holds Hearing to Review GPO Practices (Video)
- US Senate Holds Hearing to Review GPO Practices (Selected Testimony)
- US Senate Holds Hearing to Review GPO Practices (Full Hearing)
- US Senate Holds Hearing to Review GPO Practices (Written Transcript)
Written Statements:
- Statement of The Honorable Herb Kohl, United States Senator, Wisconsin
- Statement of The Honorable Mike DeWine, United States Senator, Ohio
- Testimony of Mr. Richard A. Norling, CEO of Premier
- Testimony of Mr. Mark McKenna, President of Novation
- Testimony of Ms. Trisha Barrett, Value Analysis Facilitator at UCSF
- Testimony of Mr. Joe E. Kiani, CEO of Masimo Corporation
- Testimony of Dr. Mitchell Goldstein, Neonatologist at Citrus Valley Medical Center
- Testimony of Mr. Lynn R. Detlor, GPO Concept
- Testimony of Ms. Elizabeth A. Weatherman, Managing Director of Warburg Pincus, LLC
Additional Hearing Related Information:
- Senator Kohl and Senator Mike DeWine's Request to the Federal Trade Commission and the Department of Justice to Investigate the Business Practices of the GPOs
- United States General Accounting Office's Report: "Group Purchasing Organizations Pilot Study Suggests Large Buying Groups Do Not Always Offer Hospitals Lower Prices"
- Dr. Sola's Letter to Senator Kohl
