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Medical supply costs going up; have been below inflation

Prices for the raw materials used in making surgical and lab supplies are starting to rise in countries such as China and India.

By — Posted April 19, 2010

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After several quarters of minimal inflation, the prices of many products used in health care most likely will begin to escalate again, according to a report by Premier health care alliance, a hospital- and health system-owned data research and analysis center.

"We suspect we are going to see pretty substantial increases over the next 12 to 18 months," said Mike Alkire, president of Premier Purchasing Partners, the supply-chain service division of the Charlotte, N.C.-based organization.

Premier's health care alliance is a coalition of 2,300 hospitals and 64,000 other health care sites, such as physician offices. Premier collects and analyzes numbers supplied by the coalition. Its report was issued April 5.

According to the organization's "Economic Outlook" report, surgical supplies will go up by 2.8%, and supplies used by nurses will increase by 2.4%. The price of clinical laboratory supplies will grow by 3.9%.

The researchers say that economic recovery in countries such as China and India that produce much of the raw materials needed to produce medical supplies, combined with expected increases in the value of the dollar, most likely will lead to the price growth.

Medical supply inflation is expected to mirror that of the economy as a whole, although Premier is looking to keep a hold on prices for the institutions it works with by gathering physicians to work toward developing standards for suppliers that reduce variation.

"This is the only industry in the U.S. economy where suppliers dictate the specifications of products to customers. We need to twist that around," Alkire said. "Physicians need to decide what these products will look like."

Inflation in the economy as a whole over the past year was 2.1%, according to the Bureau of Labor Statistics' Consumer Price Index. The cost of medical, surgical and personal aid devices increased 1.1%.

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