Systems of Exchange: Cooperative Purchasing in the UK and                    US Health Sectors

Schneller, Eugene S.; Harland, Christine; Walker, Harvey; Forrest, Samantha

doi:10.4135/9781446269886.n9

Cited by 3 publications

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“…A 2009 study funded by the GPO industry trade group and involving a survey of materials management staff from 429 hospitals showed that hospitals reportedly save up to 18% on health care costs using a GPO compared with negotiating contracts on their own. 6 However, the US Senate Finance Committee reported in 2010 that there was no empirical, peer-reviewed data to support GPO industry claims that these organizations generate hospital cost savings. 7 In addition, a 2011 study of 8100 hospital purchases not mediated through a GPO found that hospitals negotiated lower prices compared with GPOs in 3 of 4 purchases and had an average savings of 10%.…”

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confidence: 99%

Group Purchasing Organizations, Health Care Costs, and Drug Shortages

Bruhn

Fracica

Makary

2018

JAMA

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Most medical centers today acquire supplies, medications, and devices through group purchasing organizations (GPOs) rather than directly from a manufacturer. GPOs are intermediaries that catalog medical supplies so medical centers can purchase them from manufacturers. According to the American Hospital Association, 68% of hospitals used a GPO for their main purchasing needs in 2000, and by 2014, an estimated 98% of hospitals used a GPO. 1 The nation's largest GPO, Vizient Inc, claims to own 30% of the national market for all medical supplies, and, collectively, the 4 largest GPOs in the United States account for 90% of the market for medical supplies. In this Viewpoint, we explore the role of GPOs in health care, concerns with their current payment structure, and potential solutions.GPOs provide many benefits for hospitals. Since their inception in 1910, GPOs have simplified the way hospitals purchase supplies, ranging from bathroom items (eg, hand soap) to epinephrine vials. GPOs spare hospitals the work and expense of negotiating and contracting with hundreds of different manufacturers. GPOs instead offer hospitals a catalog of thousands of VIEWPOINT

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confidence: 99%

Group Purchasing Organizations, Health Care Costs, and Drug Shortages

Bruhn

Fracica

Makary

2018

JAMA

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“…Nonetheless, hospitals remain highly reliant on GPOs as most contract with at least one, and on average, each uses them to purchase an estimated 73% of their supplies (Schneller, 2009). Burns and Briggs (2018) report that over 75% of hospitals purchase 50% or more of commodity and pharmaceutical items through GPO contracts.…”

Section: Introductionmentioning

confidence: 99%

“…Evidence also suggests that GPOs may serve to increase a hospital’s knowledge of new products, technology, and related innovation (Burns, 2014) and help hospitals with clinical evaluation, production standardization, and new techonology testing (GAO, 2014). When procurement, research, and other services are provided by GPOs, hospital systems are spared significant human resource costs, with some estimates suggesting that GPOs save hospitals over $2 billion in labor costs (Schneller, 2009).…”

Section: Introductionmentioning

confidence: 99%

“…Although competition between GPOs provides the incentive to lower prices, the fact that their revenue is a percentage of the total supplies purchased may give them a disincentive to negotiate lower prices (Nyaga, Young, & Zepeda, 2015). One of the limitations of past research on this topic is that prior work is typically based on theoretical modeling or relies on aggregate-level data and savings percentages estimated from hospital administrator surveys (Dobson, Heath, Reuter, & DaVanzo, 2014; Goldernberg & King, 2009; Schneller, 2009; Scott, Voorhees, & Angel, 2014). Adding to this mix of evidence, the GAO conducted a study using actual data on GPO and hospital-negotiated prices for two medical devices and found that GPO device prices were often higher (GAO, 2002).…”

Section: Introductionmentioning

confidence: 99%

“…Group purchasing organizations (GPOs) are firms that historically have served as purchasing intermediaries between hospitals and health care product and service vendors. Under continual financial pressure to lower input supply costs, most hospital systems today rely on GPOs’ pooled buying power and purchasing expertise (Burns & Lee, 2008; Hu & Schwarz, 2011; Hu, Schwarz, & Uhan, 2012; Schneller, 2009). In recent years, GPOs have expanded their available services to include clinical evaluation, technology assessment, benchmarking data services, electronic commerce, market research, and others (Government Accountability Office [GAO], 2010).…”

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confidence: 99%

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Examining the financial and quality performance effects of group purchasing organizations

Walker

McAlearney

Sharma

et al. 2019

Health Care Manage Rev

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Background Hospitals frequently enter into group purchasing organizations (GPOs) to manage supply costs, yet there is mixed evidence regarding the benefit for hospitals to participate in a GPO. However, the role of GPOs on hospital operations has expanded into dimensions of quality that have not been previously examined. Purpose The aim of this study was to examine the effect of hospital participation in a GPO, as well as GPO network characteristics, on both financial and quality performance outcomes. Approach Data from multiple secondary sources regarding hospital and GPO characteristics were used to create an unbalanced panel of hospitals from 2012 to 2015. This data set was then aggregated to the GPO network level to address questions related to network characteristics, including concentration, bed size, geographic scope, and focus. We evaluated three hospital-level outcomes: supply expense, clinical processes of care score, and patient experience score. The mean of each outcome among all hospitals in a GPO in a given year was used for analyses at the network level. We used fixed and random effect models to assess the effect of hospital characteristics and network characteristics on three measures of financial and quality performance. Results We found no difference between GPO and non-GPO hospitals for any of the outcomes. However, analyses at the network level revealed network characteristics, including concentration, size, and scope, that affected both supply expense and patient experience scores, but not clinical processes of care. Conclusions These results indicate that GPO participation may be motivated for reasons beyond cost and quality performance impacts. Practice Implications Hospitals and GPOs should consider network characteristics, such as the concentration and geographical dispersion of the GPO network. Alternatively, GPOs may seek to develop homogeneously sized networks dispersed locally in order to best deliver both financial and quality benefits to their members.

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An Influence of Group Purchasing Organizations on Financial Security of SMEs Operating in the Renewable Energy Sector—Case for Poland

2020

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European countries are increasingly using renewable energy. Poland is an outsider of such solutions. The Polish energy sector is primarily based on energy produced from coal. However, environmental changes and regulations of the European Union are forcing the increased use of energy from renewable sources. Renewable energy is an industry that is still developing in Poland. At the same time, Poland is a country where the political decisions of the government over the last few years have resulted in a significant limitation of the possibilities of renewable energy development. These actions have also resulted in lowering the profitability of the currently operating renewable energy enterprises, especially those from the sector of small and medium-sized enterprises. An opportunity for SMEs operating in the renewable energy sector is to merge into industry purchasing groups. The aim of the article—and at the same time the research question—is: Is it financially safer for renewable energy companies to operate within purchasing groups compared to companies operating independently in this industry? Traditional ways of purchasing can be transferred to integrated purchasing systems, which will be created by purchasing groups associating renewable energy companies. For this purpose, the financial effects of the implementation and functioning of the purchasing groups in the renewable energy sector in relation to entities operating independently were examined. In the research of renewable energy SMEs, a comparative analysis of key indicators determining the possibility of continuing the activity of these entities was made. The following indicators were examined: current financial liquidity ratio, return on sales, operating cycle, cash conversion cycle, share of receivables in current assets, share of inventory in current assets, turnover ratios, level of receivables, liabilities and profitability. The scientific literature is dominated by studies on purchasing groups in the pharmaceutical and construction industries. Thanks to the research conducted, it has been indicated that the renewable energy industry can also improve its profitability, and thus the possibility of safe continuation of operations by extending the business model to inter-entity cooperation within purchasing groups. Increasing the efficiency of individual entities of the renewable energy industry within purchasing groups becomes particularly important during the COVID-19 pandemic. Statistical analyses and their graphic presentation present the significant impact on the safety and profitability of renewable energy entities in the form of purchasing groups.

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Systems of Exchange: Cooperative Purchasing in the UK and US Health Sectors

Cited by 3 publications

References 0 publications

Group Purchasing Organizations, Health Care Costs, and Drug Shortages

Group Purchasing Organizations, Health Care Costs, and Drug Shortages

Examining the financial and quality performance effects of group purchasing organizations

An Influence of Group Purchasing Organizations on Financial Security of SMEs Operating in the Renewable Energy Sector—Case for Poland

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