In a settlement announced last month, the Arizona Hospital and Healthcare Association (AzHHA) agreed to stop using preset rates for determining what its member hospitals will pay nurse staffing firms. The U.S. Department of Justice said the practice unlawfully prevented the firms from offering their services to higher-bidding hospitals.

A statement from the Justice Department’s antitrust division said that the hospitals’ rate-setting practice was illegally and unfairly depressing the wages paid to registry nurses, saving the hospitals up to $12.7 million a year at the nurses’ expense. The antitrust division statement asserted that the settlement would restore competition in the market for temporary nursing services in Arizona.

According to the lawsuit, AzHHA used advertising materials that estimated that the bill rates its members paid to nurse staffing companies were as much as 12% lower than they would have been if hospitals contracted directly with the staffing firms. Consequently, nurses working for the staffing firms that contracted with the hospital association made less money than nurses not hired through the AzHHA Registry, a group purchasing organization for temporary nursing services.

The proposed settlement deal would prohibit AzHHA member hospitals from exchanging information with other members about what each pays. As long as each hospital gets to directly negotiate rates with nurse staffing companies, the settlement allows the association to maintain its central registry for hiring nurses and to set standards for training, background checks, and insurance. The settlement must be approved by a federal judge.

-Anne Duffy

Q: If this settlement goes through, how do you think it will affect other group purchasing initiatives?