Healthcare Research and Development Institute reaches settlement with two State Attorneys General over alleged anticompetitive practices

Jan 29 2007

The Florida-based Healthcare Research and Development Institute, a consulting group owned by about three dozen hospital executives, has agreed to no longer accept fees from companies that sell medications, medical devices and financial services to not-for-profit hospitals nationwide, according to a settlement reached on Wednesday with the Connecticut and Florida attorneys general, the New York Times reports.

According to Connecticut Attorney General Richard Blumenthal (D), HRDI undermined competition among hospital suppliers through "undue and improper influence." A two-year investigation conducted by Blumenthal found that some hospital suppliers increased their sales at facilities administered by HRDI members after they paid consulting fees to those members. Under the settlement, HRDI members no longer can accept consulting fees or trips to resorts from hospital suppliers. In addition, HRDI will pay a $150,000 fine and change from a for-profit to a not-for-profit company called the Health Education Network. Hospital suppliers cannot join or have financial ties with HEN for three years, after which time they can join under certain conditions. Hospital executives cannot serve on the boards of suppliers or receive more than $2,500 annually for their work for HEN; executives last year received an average of $20,000 to $25,000 for their work for HRDI. HEN also cannot limit the membership of hospital suppliers per product line; HRDI limited membership to two suppliers per product line. HRDI admitted no wrongdoing in the settlement.

Blumenthal said that the settlement "shatters an anticompetitive, secret society, an elite and exclusive club of premier hospital executives and select hospital supply businesses that restrained competition to the detriment of patients and providers." According to HRDI, the consulting group has sought only to improve products and services for hospitals. HRDI President and CEO Diane Appleyard said, "HRDI never has and does not now buy, sell or encourage the purchase or sale of products or services," adding, "After more than 23 months of investigation, no wrongdoing was found and no charges were filed" (Bogdanich, New York Times, 1/25).