It should come as no surprise that many
hospitals have tried to reduce their costs by entering into
exclusive or semi-exclusive discounted contracts with their
vendors. Medicare pays hospitals for inpatient care under a
prospective payment system that fixes Medicare’s payment based on
the patient’s diagnostic related group (DRG). Similar methodology
has carried over into many of the hospital’s managed-care
contracts. Of course, the intent of using a DRG methodology is to
make hospitals more cost conscious.
