The Price Of Health Care
An announcement of some Pentagon health contracts that arrived in my in-box not long ago has had me wondering: Where does all this money go?
Part of my perplexity had to do with the announcement itself. It said that Owens & Minor of Glen Allen, Va., was awarded a $396,081,495 "prime vendor" contract.
Owens & Minor touts itself as the nation's leading distributor of "national brand-name medical/surgical supplies." The contract was open-ended deal known as "indefinite delivery, indefinite quantity" for "medical/surgical supply needs."
In the next paragraph, the announcement said that Cardinal Health 200 Inc. was awarded a contract for exactly the same amount: $396,081,495. Cardinal describes itself as "America's largest provider of health-care products and cost-management services."
And so it went: By the end of a dozen paragraphs of boilerplate , the Defense Department had said it was going to spend well over $2 billion on "medical/surgical needs" over the next two years. Most of that money was going to two companies that I'd guess few people have heard about, arranged by the Defense Logistics Agency.
Now, there's no question our military has large and pressing healthcare need. Few would dispute that our warfighters and the people who support them deserve the best care possible.
But, again, where does all this money go? Devotees of procurement matters will probably understand that answering that question is not as easy as it sounds.
In April, the Government Accountability Office asked about the same question in a startling report called "DOD's 21st Century Health Care Spending Challenges" (pdf).
Since 2000, healthcare spending by the Pentagon has gone up by 103 percent, while its discretionary budget authority has risen only by 78 percent. At the same time, spending on medications has done up by 238 percent.
A lot of this spending is the result of rising costs among contractors, passed along to taxpayers. It would be worth looking at this complicated situation more closely to see what the government is paying for.
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Posted by: Jumbotron | July 21, 2007 8:34 AM
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