Memorial Health Inc. (Memorial) has announced a proposal to enter an exclusive joint purchasing agreement with St. Joseph's/Candler Health System (St. Joseph's/Candler). Both organizations are 501(c)(3) non-profits owning acute tertiary care hospitals in Savannah, GA. Memorial owns and operates the Memorial Health University Medical Center and St. Joseph's/Candler owns and operates St. Joseph's Hospital and Candler Hospital. According to a press release on Memorial's web site, the agreement arises from the two systems working together to find solutions to shared challenges in light of reduced government reimbursement. The agreement is for joint purchase of certain medical and surgical supplies. "Purchasing supplies together could lead to improvements in the delivery of healthcare," the institutions reported.

The Department of Justice (DOJ) has announced it will not challenge the proposal. The Department said in its own statement that the proposed agreement may result in volume discounts and reduced transaction costs for both hospitals and could result in lower costs and increased hospital services for consumers. Under the proposed agreement, the two organizations would jointly evaluate medical and surgical supplies, designate suppliers and negotiate prices and terms with suppliers.

"I am pleased to learn that the Department of Justice has approved our request. I believe that this joint purchasing agreement will help us to continue to provide the highest level of quality healthcare to our community. We look forward to working with our colleagues at St. Joseph's Candler on this important endeavor," said Phillip S. Schaengold, J.D., MBA, president and CEO of Memorial Health.

An organization may submit proposals of action to the DOJ's Antitrust Division and receive a statement regarding the Division's intent to challenge the action under antitrust laws. The Department of Justice says that the proposal 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. Those requirements include that the cost of all products in a joint purchasing agreement account for less than 20 percent of total revenue of all products and services sold by each party to the agreement. In addition, products purchased through such an agreement from any given supplier account for less than 35 percent of that supplier's sale of the particular products in the relevant market.

Adapted from press releases by the Department of Justice and Memorial.

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