One of the biggest expenses for US hospitals is medical devices and other supplies, for which pricing is usually negotiated by individual hospitals and Group Purchasing Organizations (GPOs) under strict confidentiality. This leads to a huge range of prices for the same supplies and devices, driving up expenses for hospitals and the entire US healthcare system.

As new technologies come out, pricing understandably goes up, but then it falls over time as the technology becomes more established. However, all of the medical device firms come out with "new versions" of their established technologies on a regular schedule to justify keeping prices high. Hospitals are not able to keep up with contracting for all of the new products, so many pay more for the supplies than they should and most use GPOs to contract for the supplies for which they do not have time. GPOs have messed up incentives since they get paid a percentage of sales by the suppliers (who they are supposed to negotiate against). They make more money when hospitals increase their spend, but their stated purpose is to help hospitals reduce their supply spend.

Since confidential pricing creates extreme information disparities, and the incentives for those who have the most information is to keep medical device spending on an upward trajectory, the "market" for medical supplies is not a market at all in the traditional sense. This is part of what leads to US pricing for drugs and medical supplies to be so much higher than in other countries, even though you would expect a market to be more efficient than a government run system.

If the government changed its role in the medical supply market from protecting confidentiality and information disparity to enforcing transparency and fairness, we could have the medical supply "market" function more like a real market and potentially reduce the cost of healthcare in the US.