Restore market discipline to the medical device industry

Currently, independent physicians often choose high-cost, implantable medical devices for their patients. Hospitals, however, pay the bill, insulating physicians from the costs of their choices. The Government Accountability Office recently found that the majority of contracts between hospitals and medical device manufacturers include confidentiality clauses that restrict hospitals from comparing prices.

Now is the time that such blatantly anticompetitive practices should be outlawed. For any marketplace to work, price must be transparent. Medical device companies may be profiting in the short term from an imperfect market, but without market discipline they may be faced with the government installing price controls. A key responsibility of government is to ensure there is a free marketplace. 

Hospitals should rethink how they buy medical devices. The more they can use group purchasing organizations, the more likely they can achieve fair pricing and honest value. Hospitals and the government need to work together to make this a reality. Removing confidentiality clauses would not only enable increased hospital/physician collaboration on the merits and value of medical devices, it would also help bend the healthcare cost curve.

Ed Howe blogs regularly at Action for Better Healthcare.