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Premier Gives Contract to Masimo

September 5, 2002

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LOS ANGELES (AP) _ Premier Inc., one of the biggest companies that helps hospitals buy equipment, said it had awarded a contract for a blood oxygen measuring device to the small Mission Viejo-based firm Masimo Corp.

The deal breaks an exclusive arrangement San Diego-based Premier had with a much larger equipment firm, Nellcor Inc., and follows public criticism of Premier’s tendency to award contracts to larger manufacturers.

A 1999 internal Premier report found that Masimo’s device offered significant clinical advantages to some patients, but the company continued to work exclusively with Nellcor.

Unlike other purchasing agents in the health care industry, middlemen like Premier are paid by manufacturers rather than by the buyers of equipment. Critics claim the system favors large manufacturers and stifles innovation among smaller firms.

A Senate subcommittee criticized Premier and its rival Novation in April for their apparent refusal to sign contracts with small firms like Masimo.

``Continuously improving our contract portfolio reflects our members’ expectations that Premier continues to lead with new contracts and enhanced contracting strategies,″ Howard Sanders, a Premier executive, said in a news release issued Tuesday.

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