Losing preferential treatment. Physicians face limited choice in medical device selection as hospitals push to slash supply-chain costs.

The widespread use of confidentiality clauses—which limit price transparency and hospitals' ability to shop for devices based on price—and longstanding relationships between physicians and device companies are the two major factors driving costs higher on implantable devices such as artificial knees and hips or cardiovascular stents, which are among the most expensive items hospitals buy. They are frequently called physician preference items because orthopedic and cardiovascular surgeons traditionally make the final decisions as to which devices a hospital will use. Only over the past five years or so have some hospital administrators started to implement strategies to reduce the costs of these items.