Straight from the Source

A recent survey may reveal how materials managers really feel about GPOs.

It seems that group purchasing makes just about everybody’s blood boil – big manufacturers, small manufacturers, distributors, legislators. But how about materials managers and contracting professionals? If a recent survey is to be believed, they seem to think that everything’s fine with GPOs.

Lawton R. Burns, Ph.D., director of the Wharton Center for Health Management and Economics at the University of Pennsylvania, recently released the preliminary summary of a survey he conducted that asked 4,500 hospitals to share their experience and thoughts about GPOs. Burns is the author of the 2002 book The Health Care Value Chain: Producers, Purchasers and Providers.

The majority of hospital respondents believe that GPOs provide “demonstrable cost savings,” primarily through lower pricing. In addition, the majority take issue with the statement “GPOs have hindered your access to information about innovative products or manufacturers.” The details of the survey – which was funded in large part by the National Science Foundation – were to be published in the journal Health Affairs.

“I’ve talked to heads of materials management, and I’ve read a lot of their statements,” says Burns. “In my opinion, the problems small [manufacturers] face is not the GPO, but the fact that they don’t have a big enough sales force and can’t get in front of the clinician.”

Burns says he got the idea to survey hospital and IDN contracting professionals about four years ago, while participating in a panel discussion regarding GPOs. He heard two health system materials executives on the panel talking amongst themselves. “They were saying, ‘What’s the big deal? If we want stuff, we get it; the GPO doesn’t tell us what to buy,’” Burns recalls. “There was a big disconnect between what [GPO detractors] were saying and what hospitals were saying.” It was at that point that he decided to find out how hospitals really felt about their GPOs.

After searching for a suitable database of materials managers, he asked seven GPOs – Amerinet, Broadlane, Consorta, HealthTrust Purchasing Group, MedAssets, Novation and Premier – for their membership lists. With a seed grant from Owens & Minor and a large grant from the National Science Foundation (which had underwritten Burns’s healthcare value chain book), he proceeded to survey hospitals about their perception of the value that GPOs bring them. The survey was initiated in November 2005 and concluded in April.

Code of Conduct
In addition to commenting on the value of GPOs, survey respondents had an opportunity to express their views on the effectiveness of the Code of Conduct for GPOs, which was developed by the Health Industry Group Purchasing Association in July 2002.

Roughly three-quarters of hospital executives who responded to the survey have reviewed the Code of Conduct. More than 80 percent of them believe that the code is strong enough in regulating conduct within the industry, and more than 90 percent believe that their GPO “always or nearly always” complies with the Code.

Burns is conducting two more supply-chain-related studies. In the first, contracting and materials executives respond to questions about self-distribution of med/surg products and pharmaceuticals, as well as the value analyses efforts being undertaken in their facilities. In the second, Burns is surveying orthopedists regarding their relationships with their hospitals and their vendors.

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