Daly, M. (August 26, 2010). Judge determines GPOs do not violate antitrust laws. Healthcare Finance News. Retrieved February 3, 2013 from http://www.healthcarefinancenews.com/blog/judge-determines-gpos-do-not-violate-antitrust-laws
As an added support to the important and clarification of the primary article presented above; according to this article, judge determines GOPs do not violate antitrust laws, “for some time now, we have discussed the importance of group purchasing organizations (GPOs) on our blog. Critics out there often question the business model of GPOs. Some wonder if contracting with suppliers, to offer cost savings to healthcare systems, really works. They wonder if the GPO contracts are somehow unfair to hospitals. Well, a recent high court ruling finds the answer to these questions is NO.” In making the final court ruling on a recent case offered about the questioning of contracts that a company called Bard had, with a GPO, for catheter products, the court make the following statements about GOPs’ facts:
- GPO membership is voluntary and the marketplace is highly competitive, which benefits hospitals, payers and patients alike.
- GPOs do not purchase supplies; member hospitals do under the terms of GPO-negotiated contracts.
- GPO-member hospitals are not required to purchase through their GPO contracts. GPO-member hospitals can purchase supplies “off-contract,” negotiating their own prices with suppliers. However, purchasing off-contract may increase prices, as they forgo the discounts in their GPO contracts.
- On average, hospitals pay 16 percent less by buying through GPO contracts.
Freeman, G. (January 17, 2013). How Group Purchasing Can Boost Practice Revenue. Health Leaders Media. Retrieved February 3, 2013 from http://www.healthleadersmedia.com/content/FIN-288408/How-Group-Purchasing-Can-Boost-Practice-Revenue##
Group purchasing organizations (GPOs) play a very important role in the supply chains for healthcare products. The fundamental rationale for joining a GPO is that a provider will incur a lower total purchasing cost that is, the cost of the given product plus the provider’s own transaction cost, or contracting cost by buying through the GPO than by contracting for that same item directly with a manufacturer. This article supported the credibility of the original article by commenting on the important of purchasing via Group purchasing; “physician practices don’t typically devote much time to purchasing and inventory management because, after all, it’s a doctor’s office and not a warehouse. But some focus on purchasing and inventory can pay off with reduced costs big enough to affect your bottom line, says Dena Kitchens, senior director of physician services with Provista, a consulting company based in Irving, Texas. One of the first options to consider is buying supplies and equipment through a GPOs, which can give you more buying power than doing it alone, Kitchens says.” Other potential savings a practice can benefit include: purchasing capital equipment such as exam room tables, waiting room furniture and office furniture, and even medical equipment such as imaging machines and ultrasounds.
Health care providers rely on group purchasing organizations (GPO) to negotiate contracts with vendors of medical products. The impact of Group purchasing organizations (GPOs) is designed to help hospitals and other healthcare providers to pool their purchasing power to secure significant discounts on practically all medical and other hospital supplies. Hospitals, particularly small and rural, rely heavily on GPOs as they provide the economies of scale necessary to negotiate discounts from manufacturers. Independent research estimates this type of collaborative purchasing saves the healthcare system up to $36 billion yearly.Group purchasing organizations’ philosophy is to collect and help providers compare vital clinical, quality, and safety data on devices and materials. Decisions on which medical devices and supplies to purchase and use remains wholly in the hands of physicians and hospital clinical boards, but both the hospitals and clinicians value from the savings that assigned purchases provide. Freeman (2013), in his research, has raised an important issue on the impact of antitrust laws. In addition to considering its value issue, some healthcare professionals have raised questions about GPOs engaging in potentially anticompetitive business practices such as collecting excessively high contract administrative fees (Freeman, 2013).
