Antitrust Lawyer Blog Commentary on Current Developments

DOJ WILL NOT CHALLENGE HOSPITAL’S JOINT PURCHASING AGREEMENT

On September 4, 2009, the Department of Justice (“DOJ”) announced that it would not challenge a joint purchasing agreement of certain medical supplies between Memorial Health, Inc (“Memorial”) and St. Joseph’s/Candler Health System (“St. Joseph’s/Candler”). The efficiencies produced by the joint purchasing agreement will reduce transactions for the hospitals and will result in lower costs and increased hospital services to consumers.

Memorial and St. Joseph’s/Candler are 501(c)(3) non-profit organizations that own acute tertiary care hospitals in Savannah, Ga., that serve Southeast Georgia and the low-country area of South Carolina. Memorial owns and operates the Memorial Health University Medical Center. St. Joseph’s/Candler owns and operates St. Joseph’s Hospital and Candler Hospital.

The DOJ said that the joint agreement meets the requirements of the antitrust safety zone set forth in Statement 7 of the DOJ’s and Federal Trade Commission’s Statements of Antitrust Enforcement Policy in Health Care. The clause requires that the cost of all products purchased through the joint purchasing agreement account for less than 20 percent of the total revenue of all products and services sold by each participant in the agreement. It also requires that products purchased through the joint purchasing agreement from a given supplier account for less than 35 percent of that suppliers’ sale of those products in the relevant market. The joint purchase agreement between Memorial and St. Joseph’s/Candler meet these requirements.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com