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Senators investigate hospital purchasing

New York Times, August 14, 2009

Lawmakers eager to broaden healthcare coverage while holding down costs are examining the institutional market for medical supplies. Senators from committees like finance, judiciary, and aging are investigating the practices of companies that represent big networks of hospitals, nursing homes, and other institutions. These group purchasing organizations select "preferred" manufacturers and negotiate the prices of medical products, which are a closely held secret. They then use a variety of carrots and sticks to make sure their hospitals buy those brands at the contracted price, according to the New York Times.