"The influence of physicians on hospitals' IMD purchasing decisions is a particular factor to the IMD market that affects prices hospitals' pay," the GAO report states. "While physicians are generally not involved in price negotiations, they often oversee strong preferences for certain manufacturers and modes of IMDs."
As a result, individual hospitals or hospital systems may have less bargaining power relative to the few cardiac and orthopedic IMD manufacturers, the report adds. It could become an extremely costly proposition.
Physicians rely on manufacturer representatives to provide technical support during procedures. In essence, physicians may be loyal to certain manufacturers with whom they have a consulting or professional relationship. Higher costs can result from these affiliations, the GAO notes.
(Of course, some of those relationships raise other questions. A U.S. Senate committee has been investigating physician ties to a medical device company amid questions of covering up potential problems with a spinal implant device.)
Implantable medical devices, including cardiac and orthopedic devices, represent a significant share of hospitals' supply costs, with a wide variation of costs for each item. From 2004 through 2009, expenditures for hospital IMD procedures jumped from $16.1 billion to $198 billion, an increase of 4.3% per year, and a rate equal to that of Medicare spending for other hospital procedures, the GAO report states.