If you believe group purchasing organization critics during the last few decades, you likely get the impression that GPOs hold their provider members hostage to contractual relationships with selected suppliers, denying them access to perceived “new and innovative” products, services and technologies available to others outside of a particular GPO.
It’s akin to toddlers hoarding their favorite play toys on the share-time rug in pre-school.
And those perceptions could not be any further from the truth, according to Phil English, National Coordinator, the Healthcare Group Purchasing Industry Initiative (HGPII) and a former member of the U.S. House of Representatives (R-PA).
In an exclusive interview with Healthcare Purchasing News, English promoted HGPII releasing its 12th report that touts GPO ethics, fairness and competitive business practices.
“The latest annual report finds GPO organizations participating in HGPII continue to illustrate a strong commitment to maintaining the highest ethical and business conduct practices in the healthcare supply chain sector,” English said. “Through a variety of measures – interviews, questionnaires, field visits – HGPII concludes that its members are acting with openness and transparency.“
As GPOs remain focused on their goal to reduce the cost of healthcare products and services to their membership, they also will continue to be on the cutting edge in identifying ways to respond to emerging trends in the healthcare industry that allow them to remain responsive and adaptive.
“In the report, we document in detail the approach that individual group purchasing organizations, as well as the HGPII compliant parts of the supply chain, apply to making available new products and technologies,” English continued. “The availability of innovation is a founding principle of the Initiative, and we have reviewed how competing GPO networks have pursued this access with sustained effort. The process is familiar: Modified contract lengths and review committees, bolstered by technology fairs and internet forums. The results encourage our belief that GPO networks are providing pathways for many new products to enter the healthcare supply chain swiftly and to good effect.”
English argued that HGPII GPOs grant the access desired by hospitals and other healthcare organizations to companies that claim to offer “new and innovative” products, services and technologies.
“We believe that GPO firms embracing HGPII are providing innovators with a predictable path to the marketplace based on their value to healthcare providers,” he said. “Our signatories stress that the evaluation of new products is driven by member input through a developed assessment process and a standing committee structure. The competitive marketplace within the supply chain creates strong incentives for GPOs to make new products available on contract promptly.”
English dismissed accusations that HGPII-compliant GPOs, regardless of business model, restrict member access to suppliers that don’t have contracts with them.
“To be clear, group purchasing organizations interact extensively with innovative vendors who are not ‘under contract,’” he told HPN. “Hospitals have the opportunity to purchase products directly from vendors who are not part of a GPO. They just don’t get pricing advantages.”
Essentially, healthcare providers and suppliers always have been free to negotiate their own contracts, but those contracts may not be as competitive due to a lack of volume purchased or a lack of commitment and compliance to committed purchasing levels.
“Participation in group purchasing organizations is voluntary by healthcare providers, and vendors have multiple avenues to sell their products,” English said. “While I have heard and reviewed concerns about innovator companies lacking access to GPO contacts, the reality is that vendors with new products and services have extensive opportunities to participate, as our questionnaires detail.
“While no system is flawless,” English continued, “we see little evidence that the cost saving networks mediated by modern GPO operations are locking out technological advances. To the contrary, we have found that GPO innovation reviews have created access opportunities for breakthrough technologies. We would stress though that this is an ongoing process requiring effort, expertise and a very high level of participation from member hospital systems and other providers. In coming years the ability of GPOs to balance innovation and cost savings will play a significant role in the quality of care.”
