HIDA Calls for Scrutiny of Group Purchasing Organization Distributor Fee Structure

Thursday, September 6, 2007 General News J E 4
ALEXANDRIA, Va., Sept. 5 The Health IndustryDistributors Association (HIDA) announces the release of a position paper thatexamines the structure by which administrative fees charged by grouppurchasing organizations (GPOs) are paid by acute care medical productsdistributors.

"HIDA is calling for discussion on the fee structure topic with the goalof bringing the fee structure for medical products distributors in line withrecently elevated standards in GPO contracting," said Matthew J. Rowan, HIDA'spresident and CEO.

More than two years of federal government scrutiny, and new commitments byGPOs to increase transparency and promote integrity initiatives, demand aclose reexamination of fee structures and practices.

Acute care medical products distributors are currently charged GPO fees ona basis greater than the value of the distribution service they provide,according to HIDA's 2007 paper, Group Purchasing Organizations' (GPO)Distributor Fee Formula Requires Scrutiny.

Rather than being charged solely on the basis of the service they perform,distributors are also assessed fees based on the manufacturer's product price.This occurs even though distributors have no control over product prices,which are negotiated between GPOs and manufacturers. Moreover, GPOs alsocharge manufacturers fees based on these same product prices.

The result is an overpayment of almost $700 million in fees to GPOs acrossthe last 10 years.

According to HIDA's paper, distributors should only pay fees based on thedistribution services they provide. "Distributors are being affected by anoutdated fee structure that is out of sync with current industry integrity andtransparency expectations -- now is the time to update this system, " Rowansaid.

For more information on this issue, call HIDA at (703) 549-4432. To accessan electronic copy of HIDA's 2007 GPO paper, contact

The Health Industry Distributors Association (HIDA) is the premierinternational trade association representing medical products distributors.HIDA members primarily serve the nation's hospital, long term care, andphysician/alternate care markets. For more information, contact HIDA at (703)549-4432 or visit

SOURCE Health Industry Distributors Association


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