Article Do prices vary with purchase volumes in healthcare contracts? Robert B Handfield , Jaikishen Venkitaraman and Shweta Murthy Poole College of Management, North Carolina State University, USA Abstract Hospitals are facing severe increases in the cost of clinical supplies, and a common strategy is to drive economies of scale achieved by hospital consolidation. The supply strategy of “volume leveraging” involves sourcing through contracts with Group Purchasing Organizations (GPOs) for commercial distributors and manufacturers of medical products. This study seeks to docu- ment the empirical benefits associated with volume leveraging, through analysis of purchasing data from three large hospitals. The dependent variables include a number of factors that are used to justify volume leveraging approaches, yet the study finds no significant explanatory factors that determine price variation related to the volume purchased. Interviews with physi- cians and clinicians suggest that poor data quality leads to lack of transparency, and an inability to aggregate volumes across inventory SKUs may be preventing volume-based cost savings from materializing. The results also suggest that lack of transparency results in low levels of utilization, which increases costs. Keywords Visual analysis, data analysis, content analysis, quantitative, industrial organization, industrial economics, theoretical perspectives, rational choice Introduction Healthcare in the USA is a US$3.2 trillion industry (Speaks, 2016), yet it is often described by experts as a “cottage industry” due to the lack of maturity surrounding its contract management and supply chain practices (Abdulsalam et al., 2015a; Handfield, 2012). Research suggests that up to 40% of funds spent are non-value-added in nature (Schneller and Corresponding author: Robert B Handfield, Poole College of Management, North Carolina State University, CB 7229, Raleigh, North Carolina 27695–7229, USA. Email: robert_handfield@ncsu.edu Journal of Strategic Contracting and Negotiation 1–30 ª The Author(s) 2019 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/2055563619837882 journals.sagepub.com/home/jsc