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Highlights

A review was made of the procurement practices of 37 hospitals in 6 cities to determine: (1) the prices paid for selected routine hospital items; and (2) whether there are significant variations in prices paid for the same or similar hospital items within the same geographical area.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services 1. The Secretary of HEW should direct the Administrator of the Health Care Financing Administration (HCFA) to instruct Medicare intermediaries to: (1) gather and compile price information in various areas on the five items GAO identified that appeared to offer the greatest potential for cost savings; and (2) communicate such information to the hospitals they service.
Closed - Not Implemented
On October 1, 1983, Medicare began implementation of a hospital prospective payment system that bases payments to individual hospitals on the average costs of all hospitals. This provides an incentive to hospitals to purchase items at the lowest cost. Therefore, there is less need for HCFA to be concerned about prices hospitals pay.
Department of Health and Human Services 2. The Secretary of HEW should direct the Administrator of HCFA to instruct intermediaries to periodically monitor their hospitals' purchases of the items identified and report back to HCFA in order to: (1) assess the extent that this activity may result in cost savings; and (2) determine whether it should be expanded to include other hospital supply items.
Closed - Not Implemented
On October 1, 1983, Medicare began implementation of a hospital prospective payment system that bases payments to individual hospitals on the average costs of all hospitals. This provides items at the lowest cost. Therefore, there is less need for HCFA to be concerned about the prices hospitals pay.

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