New Independent Study Finds Healthcare Group Purchasing Organizations to be Procompetitive

A new independent academic analysis of healthcare group purchasing organizations (GPOs) found that the purchasing partners to virtually all 5,000+ American hospitals are procompetitive and reduce hospital costs through high volume purchasing power. The analysis was conducted by economists from the University of North Carolina and the University of Florida, and published in a 2013 issue of Managerial and Decision Economics.

The authors also considered GPO funding mechanisms and the so-called GPO Safe Harbor, which Congress enacted in 1987 to protect the healthcare cost savings and efficiencies that GPOs deliver to hospitals, and to codify the model under which GPOs had been operating for nearly a hundred years. The authors found that any potential conflicts created by the GPO funding mechanism “may well be more apparent than real.”

“GPO cost savings, administrative structure and business practices have been thoroughly reviewed by the U.S. Government Accountability Office (GAO), Department of Justice (DOJ), Federal Trade Commission (FTC), the U.S. Supreme Court, the 8th Circuit Court of Appeals, academia and virtually all of America’s 5,000 hospitals. This study on the competitive effects of GPOs joins that growing body of analysis,” said HSCA President Curtis Rooney. “All independent, empirical, and non-industry analyses of GPOs have found that GPOs deliver billions in cost savings every year to the healthcare delivery system and deliver the best products at the best value to their hospital, long-term care and healthcare provider partners.”

To read the full analysis, click here.