GAO Report Casts Healthcare GPOs in Favorable Light

John Commins, for HealthLeaders Media , September 28, 2010

Rooney said the GAO report "clearly demonstrates" GPOs commitment to transparency, even as they secure significant savings for the hospitals and healthcare systems they serve. "GAO and academic research have documented the significant cost savings and the wide range of valuable services that GPOs provide to hospitals, which is why virtually all American hospitals voluntarily contract with GPOs," he said.

The GAO study determined that:

  •    90% of hospitals voluntarily contract with GPOs, and these hospitals use an average of two to four GPOs per hospital;
  •  All GPOs evaluate technologies that could benefit patients, and can rapidly introduce these technologies in the marketplace;
  •  GPOs respond to hospitals and long-term care providers by adding services to improve quality, safety and economy;
  •  All GPOs offer a range of services to hospitals, including individualized contracting, product evaluation such as clinical evaluation and standardization, and assessment of new technologies;
  •  GPOs distinguish themselves in a competitive marketplace by offering additional services designed to meet the needs of hospitals, including e-commerce and benchmarking services, patient safety services, clinical resource guides, and supply chain services to help manage in-house pharmacies;
  •  GPOs provide many of these additional services at no cost to hospitals through collection of nominal administrative fees received from vendors under GPO contract;
  •  3 of 5 device vendors interviewed indicated that they are now paying lower administrative fees, and that fees are more consistent and predictable as a result of transparency initiatives voluntarily undertaken by GPOs. The average weighted contract administrative fee for the GPOs interviewed ranged from 1.22% to 2.25%;
  • Multi-sourcing device contracts may be less cost-effective than anticipated, as some medical device suppliers have increased device prices in response;
  • All GPOs reported that their codes of conduct impacted their contracting practices, innovative product selection, administrative fees, conflict of interest policies, transparency and accountability of GPO practices;
  • Voluntary initiatives undertaken by GPOs include establishing and revising codes of conduct, creating ethics hotlines for employees, hiring compliance officers, and convening Best Practices Forums, where Congressional staff is invited to monitor progress.


John Commins is a senior editor with HealthLeaders Media.

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