Observation Deck: Whose Price is it?

You see it all the time – the lines drawn in the sand. Divorcing couples expend way too much energy fighting over who gets the coffee table in the basement. Home sellers threaten to rip out tattered window treatments unless the buyer pays for them. By the time things get to this level, chances of real progress are pretty slim. Add to this the threat of litigation, and one can find oneself entangled in some pretty weird arguments.

There is such an argument being waged in healthcare contracting. It is over this question: “Who ‘owns’ the prices you pay for products?” Not who owns the products themselves, or who has access to the price. No, the question is, who owns the price. The concept is difficult to wrap one’s mind fully around, yet it is being raised.

Eileen McGinnity of Aspen Healthcare Metrics knows all about this question. She spoke about it at the recent Expo of the Health Industry Group Purchasing Association (HIGPA). You may recall that her company (a subsidiary of MedAssets) was involved in a lawsuit with Guidant Corp. over Aspen’s right to collect from its hospital and IDN clients the prices they pay for various physician-preference items, such as implants. (With this information, Aspen spits back the information to its clients, though not at a hospital-specific or IDN-specific level, so that they can gauge how their prices stack up against others.) Guidant claimed that its contracts precluded hospitals or IDNs from sharing their pricing with a third party. The two parties settled the case without answering the mysterious question, “Who owns prices?”

At press time, Guidant and ECRI – the nonprofit, healthcare research company – were locked in combat over the same issue. This time, the focal point is ECRI’s PriceGuide, an online database for benchmarking supply costs. The case could be ready for trial in a year.

Guidant and ECRI will fight this out in the courts. But couldn’t IDN contracting professionals avoid the courtroom altogether by addressing the issue upfront, before signing a contract? If the IDN signs away its right to share its pricing (and hence “gives” its pricing to the vendor), then shouldn’t the IDN expect a pricing concession in return? Conversely, if the IDN refuses to sign away its right to share its pricing (and hence retains “ownership” of it), then it should expect some pushback from the vendor, probably in the form of higher prices.

I’m no legal expert. Perhaps case law already exists on the issue. But it seems that this is a business decision for the provider and the vendor, who together at the negotiating table must decide, “How much is ‘ownership’ of pricing worth?”

About the Author

Mark Thill
Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master's degree in journalism from Northwestern University in Evanston, Ill.
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