Publisher’s Letter November/December 2006

Upon Further Review
It was an interesting year for The Journal of Healthcare Contracting in 2006. We explored many topics that truly impact IDN contracting initiatives. Many of the topics are ongoing issues without simple answers and will need continued discussion.

In early 2006, we explored the differences in distributors. Since this article, Owens & Minor bought McKesson’s Medical-Surgical acute care business. It seems like as IDNs become more integrated, so do distributors to better meet the comprehensive needs of IDNs in a more formal arrangement. I think we will see this trend continue for years to come.

GPO differentiation was also explored, showing us that GPOs continue to evolve into organizations that do more than offer access to contracts for supplies and services. GPOs are growing their offerings into areas of consulting, technology and clinical information. In 2006, hospitals and IDNs again voted with their purchases that GPOs add value. I think 2007 will show great growth of dollars purchased through GPO contracts. In fact, I am pretty confident the dollars accessed through GPO contracts will be over $125 billion.

There are many large issues looming for 2007 that we will explore. Physician preference items such as orthopedics, implantables and pharmaceuticals and the possibility of containing cost through contracting will definitely be in the forefront. How contracting professionals forge relationships with physicians and clinicians will determine if this is a real opportunity for IDNs.

Outsourcing service lines is a big issue that is coming to the top of the minds of contracting professionals as well. IDNs will have to understand the balance of the benefit of outsourcing and letting go of control of certain functions.

Reimbursement is always a hard issue to tackle. It seems like the continued chess game of how providers react and manage to changes in reimbursement is often for survival. As manufacturers continue to research and release more expensive technologies that physicians seem to embrace as advancements, the hospitals get caught holding the bill. I don’t have a solution for this issue, but it will be interesting to see how our nation’s leading IDNs handle it in 2007.

Have a happy and festival holiday season. And as always, thanks for reading The Journal of Healthcare Contracting.

John Pritchard About John Pritchard

John Pritchard is the publisher of The Journal of Healthcare Contracting as well as The Major Accounts Exchange (The Max).

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