Interesting News Article from 2002... Still Holds True.

MEDICINE'S MIDDLEMEN

Hospitals Sometimes Lose Money by Using a Supply Buying Group

By MARY WILLIAMS WALSH and BARRY MEIER

Two groups that dominate the purchasing of medical products for about half the nation's nonprofit hospitals have long said they exist to save money, pooling the influence of thousands of hospitals to negotiate a good price on the best products. But some hospitals are finding otherwise. They have learned that they can do better on their own, and are now raising questions about the need for the huge buying groups, which negotiated contracts last year for $34 billion in supplies. A new, preliminary study by the research arm of Congress, the General Accounting Office, is also challenging the buying groups' claims. In the study, a copy of which was obtained by The New York Times, the G.A.O. found that using a big buying group "did not guarantee that the hospital saved money." In fact, prices negotiated by buying groups "were often higher than prices paid by hospitals negotiating directly with vendors" — in some cases "at least 25 percent higher," the G.A.O. said. At issue are hundreds of millions, if not billions, of dollars in annual health care costs, much of it paid indirectly by taxpayers through programs like Medicare and Medicaid and by private insurers. The G.A.O. report is to be presented today at the first Congressional hearing on the operations of these buying groups. The hearing will be held by the antitrust subcommittee of the Senate Judiciary Committee. The subcommittee is headed by Herb Kohl, Democrat of Wisconsin. The report comes a day after one of the largest buying groups, Premier Inc., took out a full-page ad in Roll Call, a newspaper covering Capitol Hill. In the ad, Premier took credit for "holding down the costs of health care for American businesses, taxpayers, and consumers." The G.A.O. cautioned that its initial report was limited in scope and said it planned a broader inquiry. Government auditors surveyed hospitals in only one city for the prices they paid for two categories of products: pacemakers and hypodermic needles with safety features to prevent accidental sticks. Some of the hospitals surveyed bought such products through contracts negotiated by buying groups, while others made their own deals. Officials of the two biggest buying groups, Premier and Novation, which together negotiate contracts on behalf of about half of nonprofit hospitals, said they had not seen the study. Told of its findings, they disputed its methods and results. Jody Hatcher, vice president for marketing for Novation, based in Irving, Tex., said the findings were skewed because the study looked at only two products rather than a wider range of supplies. "I think you have a flawed study," he said. He and Premier officials said that if hospitals could really save money on their own they would be leaving buying groups in droves. But the G.A.O. survey, even with its limitations, adds to the growing debate about whether groups like Premier and Novation really lower the cost of medical products for the hospitals that own the groups or buy through them. Some hospital executives said in interviews that the groups did save them money, while others said they saved many millions of dollars by going it alone. Unlike other purchasing agents, the groups buying supplies for hospitals are financed by the products' manufacturers and distributors, which pay the groups' fees based on a percentage of sales. That arrangement has led to questions about whose interests the buying groups really serve. Hospitals that have broken away from buying groups cite several reasons for getting lower prices than they would have through the groups. One is the ability to negotiate with a larger number of manufacturers. Another is shorter contracts that allow hospitals to take advantage of falling prices. A third is that manufacturers freed of the need to pay fees to the buying groups will pass on the savings to hospitals. Two years ago, for example, executives of a 10-hospital chain in Iowa decided to end their relationship with Premier. Officials of the Iowa Health System said they found that each time they renegotiated a supply contract, they beat the buying group's price by 12 percent to 14 percent. They are already saving $7 million a year, and expect that figure to grow as more contracts are redone. Duncan Gallagher, executive vice president of Iowa Health, said that for years the common wisdom was that hospitals that tried to buy on their own would pay more. He expects that his system may eventually save 30 percent to 40 percent. "The people who are saying it is impossible are wrong," Mr. Gallagher said. Nicholas C. Toscano, who oversees purchasing for the Virtua Health chain of hospitals in New Jersey, said administrative fees and incentive payments that suppliers pay buying groups for handling their contracts can also raise prices for hospitals. Virtua studied the benefits and costs of buying through a large group and decided it could do better on its own. "If the administrative fee is 3 percent, we normally save, right off the top, 3 percent," Mr. Toscano said. Another factor driving up buying-group prices, Mr. Toscano said, is contract language that allows manufacturers to lock in price increases over several years, even at times when the price of the products is falling on the open market. He said that by writing contracts for shorter periods, Virtua has found opportunities to take advantage of falling prices. But Premier officials say they also renegotiate prices on contracts and some hospitals add that the size of the big buying groups can command better prices. "It is very simple economics," said Keith Callahan, a vice president of Catholic Healthcare West, a large hospital system based in San Francisco that belongs to Premier. The G.A.O. review is a rare effort to examine independently the impact of buying groups on hospital prices. In the case of pacemakers, it found that while some hospitals using buying-group contracts got better prices on some models, they got much worse prices on others. The G.A.O. also found that big groups like Premier and Novation often did not get better prices for the products under study than did smaller purchasing groups. "This lack of consistent price savings is contrary to what would be expected for large" buying groups, the study found. The survey also found that large hospitals — those with more than 500 beds — often got lower prices on their own than by using a buying group. By contrast, small and medium hospitals tended to do better using a buying group. But even in that group, government auditors found, the experience of hospitals differed.

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Managing Diabetes During the Holidays

Having diabetes shouldn't stop you from enjoying holiday celebrations and travel. With some planning and a little work, you can stay healthy on the road and at holiday gatherings with friends and family.

The most important step in managing diabetes during holiday travel and festivities is preparing. Know what you'll be eating, how to enjoy a few traditional favorites while sticking with a healthy meal plan, and how to pack necessary supplies for a trip, and you're all set to celebrate!

Feasts and Parties

Before you go, take these steps to make sure you stick to your healthy meal plan.

• Eat a healthy snack to avoid overeating at the party.
• Ask what food will be served, so you can see how it fits into your meal plan.
• Bring a nutritious snack or dish for yourself and others.

You don't have to give up all of your holiday favorites if you make healthy choices and limit portion sizes. At a party or holiday gathering, follow these tips to avoid overeating and to choose healthy foods.

• If you're at a buffet, fix your plate and move to another room away from the food, if possible.
• Choose smaller portions.
• Choose low-calorie drinks such as sparkling water, unsweetened tea or diet beverages. If you select an alcoholic beverage, limit it to one drink a day for women, two for men, and drink only with a meal.
• Watch out for heavy holiday favorites such as hams coated with a honey glaze, turkey swimming in gravy and side dishes loaded with butter, sour cream, cheese or mayonnaise. Instead, choose turkey without gravy and trim off the skin, or other lean meats.
• Look for side dishes and vegetables that are light on butter, dressing and other extra fats and sugars, such as marshmallows or fried vegetable toppings.
• Watch the salt. Some holiday favorites are made with prepared foods high in sodium. Choose fresh or frozen vegetables that are low in sodium.
• Select fruit instead of pies, cakes and other desserts high in fat, cholesterol and sugar.
• Focus on friends, family and activities instead of food. Take a walk after a meal, or join in the dancing at a party.

Traveling for the Holidays

Leaving home to visit friends and family means changing routines. Make sure you remember to take care of your diabetes while traveling. Check blood glucose (sugar) more often than usual, because a changing schedule can affect levels.

Remember Your Medication

• Pack twice the amount of diabetes supplies you expect to need, in case of travel delays.
• Keep snacks, glucose gel, or tablets with you in case your blood glucose drops.
• Make sure you keep your medical insurance card and emergency phone numbers handy, including your doctor's name and phone number.
• Carry medical identification that says you have diabetes.
• Keep time zone changes in mind so you'll know when to take medication.
• If you use insulin, make sure you also pack a glucagon emergency kit.
• Keep your insulin cool by packing it in an insulated bag with refrigerated gel packs.

On the Road and in the Air

• Get an influenza vaccination before traveling, unless your medical provider instructs otherwise. Get the flu shot, not the nasal spray.
• Wash hands often with soap and water. Try to avoid contact with sick people.
• Reduce your risk for blood clots by moving around every hour or two.
• Pack a small cooler of foods that may be difficult to find while traveling, such as fresh fruit, sliced raw vegetables, and fat-free or low-fat yogurt.
• Bring a few bottles of water instead of sweetened soda or juice.
• Pack dried fruit, nuts, and seeds as snacks. Since these foods can be high in calories, measure out small portions (¼ cup) in advance.
• If you're flying and do not want to walk through the metal detector with your insulin pump, tell a security officer that you are wearing an insulin pump and ask them to visually inspect the pump and do a full-body pat-down.
• Place all diabetes supplies in carry-on luggage. Keep medications and snacks at your seat for easy access. Don't store them in overhead bins.
• Have all syringes and insulin delivery systems (including vials of insulin) clearly marked with the pharmaceutical preprinted label that identifies the medications. Keep it in the original pharmacy labeled packaging.
• If a meal will be served during your flight, call ahead for a diabetic, low fat, or low cholesterol meal. Wait until your food is about to be served before you take your insulin.
• If the airline doesn't offer a meal, bring a nutritious meal yourself. Make sure to pack snacks in case of flight delays.
• When drawing up your dose of insulin, don't inject air into the bottle (the air on your plane will probably be pressurized).
• Stick with your routine for staying active. Make sure to get at least 150 minutes of physical activity every week. Ten minutes at a time is fine.