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Senator Questions Medtronic Over Canceled GPO Contracts BY LAUREN UZDIENSKI, MAY 4, 2011

When Medtronic canceled certain contracts with GPOs Novation in Premier back in March, they alleged that ending these relationships would save the company $60 million per year. Now the government is worried that move will cost Medicare money, and Senate finance committee chairman Max Baucus has announced plans to investigate the company's choice to cancel what was reportedly $2 billion in contracts with Novation and Premier.

In a press release, Mr. Baucus questioned whether ending the contracts was an attempt to "attempt to discourage transparency and increase costs." Further, he said the cancellation could "undermine our efforts to reduce health care costs and increase transparency for consumers and taxpayers." Appended to the press release was the letter sent to Medtronic by Mr. Baucus, which included a number of questions about how long the company had relationships with the aforementioned GPOs, the compensation structure of the agreements, their reasons for canceling the contracts and whether they planned to cancel any further agreements in 2011 or 2012. Mr. Baucus also sought details of a company presentation at an investor event in March, where President and CEO Bill Hawkins reportedly said he would be "shocked" if the company's competitors did not follow Medtronic's lead by dissolving contracts with GPOs. Mr. Baucus requested "copies of emails, phone logs, transcripts, or any other documentation of communication" Medtronic may have had with its competitors relating to GPO strategy.

The Minneapolis Star-Tribune says that Medtronic will reply "in a timely manner" to the letter.

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