A fine summer spoiled - From the Editor

Chances are, there were a few big time group purchasing organization executives who spent the first part of the summer blissfully sipping a few brews at the beach, before smiling to themselves and slipping into delightful sun-drenched naps comforted by lovely thoughts that their troubles with the Senate and with those pesky notions of GPO reform were over.

The execs probably convinced themselves that the codes of conduct had done the trick after all, and the trail that once led to such unpleasant charges of exclusion, malfeasance and exclusivity by The New York Times, had grown colder than the beer in their hands.

Then, on July 16, the foreboding music began and Jaws appeared once more, spoiling what could have been such a peaceful summer. Now, after a scolding from the Senate anti-trust committee for a leisurely rate of cooperation and somewhat reluctant adherence to some of their own codes of conduct, big time GPOs are again facing more months in the crosshairs.

The prime complaints about big GPOs, and for those of you who are less familiar with the landscape we're talking about Premier and Novation, still seem to center around transparency. The Senate panel, which really does hold the hammer because it has the weapon of choosing to begin the legislative process that could some day strip GPOs of a dock in the Safe Harbor that exempts groups from anti-kickback rules, wants more and they also want less. Lawmakers, particularly Sen. Herb Kohl, the tenacious Wisconsin Democrat who has kept the highest profile during the two Congressional GPO hearings, want more transparency in GPO business dealings. Kohl also wants to see a few less long term contracts and more chances for small suppliers to break what he still sees as a GPO logjam, a barrier to entry still viewed by some as keeping potentially life-saving products from being used in U.S. hospitals.

When they were issued some months ago, the GPO codes of conduct were hailed, mostly by the groups themselves, as placards of reform. In all fairness, it appears that Premier and Novation have taken some steps to distance themselves from some of the dubious business practices that dumped them into the ocean swimming next to Jaws in the first place. But as Premier's oh-so-quiet release of financial information on an obscure spot on the group's website shows, the big alliance is not that happy telling the world that it made a 49 percent profit from its business activities in its last fiscal year. That figure doesn't quite jibe with the notion that Premier operates selflessly, though privately.

Novation found itself taking even more fire from the Senate panel, particularly on its practice of bundling contracts. Insiders at the committee's offices insist Novation has dragged its feet in weaning itself from bundled deals. "They're not entirely compliant," one told HPN, "even though they agreed to do it." The word is that Novation told the Senate panel that it wants to wait until certain contracts expire in the first quarter of 2005 before calling it quits on bundled contracts.

Few are calling for the end of Safe Harbor or a breakup of the group purchasing system. GPOs won't go away and they certainly won't go away quietly. To their credit, and with some exceptions, most groups have done better in self reform.

So if it's not exactly business as usual with the Big GPOs, it's at least a waiting game. Waiting until another painful Senate hearing. They should just watch out when wading into that water again. Jaws might still be circling.

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