- Cowie, M. (January, 2011). Group Purchasing Organizations and Antitrust Law: Recent Developments. DecHert. Retrieved February 3, 2013 from http://www.dechert.com/Group_Purchasing_Organizations_and_Antitrust_Law_Recent_Developments_01-20-2011/
As an important subject matter in the effective delivery of healthcare products and services, GOPs (Group Purchasing Organizations) were created to help hospitals and other providers put in their purchasing power to secure substantial discounts on virtually all medical and hospital goods. In relation to the government antitrust laws of consumer and business protections, Cowie (2011) provides a recent development between two isles, and the impact that legal and monitoring errors may have on hospitals as customers. It also has impact on medical technology companies as suppliers and on the healthcare sector as a whole. As it was presented in the article, “GPOs have recently come under government scrutiny. This is because GPO compensation and arrangements may in fact lead to higher supplier prices, potentially leading to supplier monopoly or market power” (anti-competitive behavior). Additionally, “past concerns over GPOs focused on the possibility that GPOs would lead to undue leverage by purchasers over suppliers, also known as the exercise of monopsony power (Cowie, 2011). While antitrust law has focused on harm to consumers through higher prices, the exercise of monopsony power resulting in low pricing may also raise concerns. According to the Statements of Health Care Antitrust Enforcement Policy (SHCAE), joint purchasing arrangements in some circumstances “might be able to drive down the price of the product or service being purchased below competitive levels.” The 2010 Merger Guidelines state that “enhancement of market power by buyers, sometimes called ‘monopsony power,’ has adverse effects comparable to enhancement of market power by sellers.” The concern that GPOs will lead to monopsony power or excessively low supplier pricing has waned. This may be because of the fact that there are several national GPOs, and none has a share of purchasing typically associated with monopsony power. GPOs are now under heavy scrutiny for a different reason. The new concern is the opposite of the previous concern: it is that GPO compensation arrangements may lead to higher supplier prices, potentially leading to supplier monopoly or market power.
