Novation LLC’s Contracting Scheme Ruled Legal - Healthcare Reform on Hold

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Kansas City, KS April 27, 2009. A Tenth Circuit Court of Appeals panel ruled last Thursday in support of US District Court Judge Carlos Murguia’s order that the nationwide hospital supply cartel created by Novation LLC and Jeffery Immelt the CEO of General Electric could not be challenged in court for artificially inflating hospital supplies and over charging Medicare and Medicaid. The ruling in Medical Supply Chain, Inc. v. Neoforma, Inc. et al, 10th Circuit Case No. 08-3187 upholds Judge Carlos Murguia’s earlier dismissal based on a heightened pleading standard found to be unlawful by the US Supreme Court in Erickson v. Pardus, No. 06-7317 (U.S. 6/4/2007).

Last Thursday’s ruling denying the motion to reopen Kansas District Court Case 05-2299-CM effectively ends the last challenge to Novation and GE’s GHX long term anticompetitive control that assigns market share and permits only suppliers that pay a kickback the chance to sell their products to America’s hospitals. This practice was exposed by a series of New York Times articles on Novation LLC’s role in controlling the price hospitals pay in the 1.8 Trillion dollar healthcare market. The London Times on July 31, 2006 reported the US Department of Justice was investigating Novation LLC for these business practices.

Studies by the Government Accounting Office, Professor Prakash Sethi, president of the International Center for Corporate Accountability at Baruch College in New York, and Harvard Law School Professor Einer R. Elhague have called into question the benefits to hospital members of the Novation LLC cartel and the legitimacy of the $5 Billion dollars of fees Novation LLC takes from hospitals each year. A public interest group www.stopgpokickbacks.org has also been formed by patients, physicians, healthcare workers, device manufacturers, distributors, and concerned citizens committed to returning true competition to the hospital supply marketplace.

The Kansas US District Court Judge Carlos Murguia appointed to the bench by President Bill Clinton, refused to permit Medical Supply Chain, Inc. to submit evidence in support of its antitrust claims against the Novation LLC cartel members or to engage in discovery.

Medical Supply Chain, Inc.’s founder Samuel Lipari decried the ruling stating that; “Courts are unwilling to hear from competitors to the cartel, despite the collapse of General Motors and Chrysler from unaffordable employee healthcare costs. The Federal Trade Commission will need to restore competition to hospital supply markets.”

About General Electric Company:
 GE is the creator and part owner of GHX, LLC the nation's sole remaining hospital supply electronic marketplace to health system institutions. Media contacts can be made through General Electric, Fairfield Russell Wilkerson, 203-373-3193 (office); 203-581-2114 (mobile) [e-mail] www.ge.com



About Jeffery Immelt: 
Jeffery Immelt is the Chief Executive Officer of the General Electric Company (NYSE: GE). Jeffery Immelt while president of GE Medical created and took ownership in GHX, LLC the nation's sole remaining hospital supply electronic marketplace to health system institutions. Media contacts can be made through General Electric, Fairfield Russell Wilkerson, 203-373-3193 (office); 203-581-2114 (mobile) [e-mail] www.ge.com



About Novation: Novation comprises the 2,500 members of VHA Inc. and the University HealthSystem Consortium (UHC), two national health care alliances and nearly 9,000 members of Provista, LLC (formerly known as Healthcare Purchasing Partners International, LLC (HPPI). VHA, UHC and Provista members purchased $31.6 billion in supplies through Novation LLC in 2006.

About Medical Supply Chain: 
Medical Supply Chain (MSC) is a worldwide provider of web-based supply chain collaboration solutions with an electronic marketplace serving health care communities and their trading partners worldwide. In May of 2000, Samuel K. Lipari launched Medical Supply Chain, Inc. by introducing technology applications now adopted as the gold standard for delivery of institutional medical supplies for US Healthcare systems. To learn more visit: http://www.MedicalSupplyChain.com/news.htm