In a written response to questions about its prices, Novation said, "It is possible that on any given day and with respect to any given product, a hospital -- especially a large hospital system -- may be able to obtain a better price than Novation".
This means that if a contract is simply handed over or sold - as KPMG has implied it intends to do through novation - it is clear that the party who ends up carrying out the works was or may not have been the party who won the contract based on the "fair" and "transparent" criteria required by law.
Mr. Guggenheim said that the deferral of revenue reflected Neoforma's "greater confidence" that it would be able to "maximize the payments from Novation" that it receives in the form of fees when it meets certain business goals.
Novation said it was Becton Dickinson that offered the extra payment, while Becton Dickinson said it was "negotiated by Novation".
Novation said it awarded a contract to Nellcor, rather than Masimo, for financial and clinical reasons.
Novation says it received about a dozen special advance payments from suppliers that were awarded contracts.
The lawsuit does not contend that the hospitals did this deliberately, but that Novation knew it was happening.
The payments are among about a dozen similar ones that Novation said it had accepted from medical product companies.
In addition, Novation said it would solicit new bids for existing contracts when better medical products become available.
One medium-sized hospital in the Midwest found, for example, that if it were to switch to Novation's products, it would add about $10,000 a year, or about 11percentto to its garbage-bag budget.
Novation said that it would reduce the fees that it collects from some manufacturers and try to pass the manufacturers' reduced selling costs through to hospitals in the form of lower prices.
