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Novation's Play in Physician-Preferred Products

Executive Summary

The Senate hearings held last year on hospital group purchasing highlighted one of the most difficult challenges hospital groups face: getting physician-preferred products like drug-eluting stents and orthopedic implants under contract. For the past ten years, Novation has had a program focused specifically on such high tech devices, and though it hasn't always been easy, the program has been remarkably successful in getting manufacturers to put products on contract.

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Reforming Group Purchasing: How Far is Far Enough?

For the past year, hospital purchasing groups have been under a spotlight, as Senate investigators and major media investigate charges that groups have done more harm than good in favoring large product companies. One of two groups at the center of the crisis, Premier, says it is cleaning up its act-and even hired an ethicist to help-but its take on necessary reforms embraces a broad, big-picture view of hospital/GPO relationships. MedAssets is taking more of a back-to-basics approach that stresses flexibility and choice in contracting options while helping members address the escalating costs of physician preferred products. The challenge for GPOs: the pressure to reform comes at a time when competition for hospital customers is fierce, in part because the financial pressure on hospitals has never been greater.

Is Group Purchasing Broke?

Facing unprecedented scrutiny from major media and the US Senate, leading GPOs are beginning to revamp their policies to address concerns on the part of small suppliers that the current system unfairly excludes them. But given the animosity between the two sides, will there ever be a meeting of the minds on GPO reform?

Novation's Debut

The new merged supply chain programs of VHA and University Hospital Consortium is off the ground, headed by a former Baxter executive. The question for suppliers is the approach the organization will take--confrontational or conciliatory--as it shapes a dedicated program.

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