Group Purchasing Organizations and Costs

Abstract

To the Editor Health care group purchasing organizations (GPOs) play an integral role in the health care supply chain by helping hospitals, surgery centers, clinics, long-term care facilities, and other health care organizations source the best products and services at the best value. Unfortunately, I think the Viewpoint by Mr Bruhn and colleagues 1 arrived at flawed conclusions about GPOs.GPOs are cost-savings partners that help hospitals source lifesaving medical products for the patients they serve. GPOs save the health care system up to $55 billion annually. 2 Independent industry-and nonindustry-funded analyses of GPOs have consistently found that GPOs deliver billions of dollars in cost savings every year to the health care delivery system. 3,4 Despite the authors' claims regarding vendor fees, GPOs disclose all administrative fees earned on their purchases to members in writing. There are no undisclosed fees that result in better listings in GPO catalogs, and all GPO contracts are voluntary and the product of open competition and evaluation by member clinical advisory committees. GPO cost savings, administrative structure, and business practices have all been thoroughly reviewed by the US Government Accountability Office (GAO), the US Department of Justice, the Federal Trade Commission (FTC), the US Supreme Court, the US Court of Appeals for the Eighth Circuit, academia, and most US hospitals.The authors suggested a link between GPOs and drug shortages, but stated that "there is limited evidence to support the direct link between GPOs and drug shortages." 1 GPOs work with health care organizations, manufacturers, and distributors to help prevent and mitigate drug shortages. The US Food and Drug Administration (FDA) has repeatedly identified quality control problems, manufacturing issues, and barriers to getting new suppliers on line as the primary causes of drug shortages-not GPOs.Former FTC chairman Jon Leibowitz and coauthors examined GPOs and found that they operate in a competitive environment and reduce health care costs for patients, hospitals, payers, Medicare and Medicaid, and taxpayers. 5 They also found that repealing the GPO safe harbor exemption would cause both short-and long-term disruptions to the supply chain that could jeopardize the ability of physicians and hospitals to effectively treat patients, and would provide no benefit.Joining a GPO is completely voluntary and hospitals that become GPO members frequently purchase off contract, yet they continue to choose GPOs to help source lifesaving medical products for the patients they serve.