GROUP PURCHASING ORGANIZATIONS: Pilot Study Suggests Large Buying Groups Do Not Always Offer Hospitals Lower Prices
Abstract
This testimony discusses the role of group purchasing organizations (GPO) in the marketplace for medical devices used in hospitals. Faced with persistent pressures to cut their costs, hospitals over the past two decades have increasingly relied on specialized private firms GPOs to keep the cost of supplies in check. Hospitals buy everything from sophisticated medical devices for example, cardiac defibrillators to commodities such as saline solution through GPO negotiated contracts. By pooling the purchases of their member hospitals, these specialized firms are intended to negotiate lower prices from vendors (manufacturers and distributors), which can benefit hospitals and, ultimately, consumers and payers of hospital care (such as insurers and employers). The price advantages of a GPO are expected to be greater for large GPOs, which negotiate on behalf of nearly 2,000 hospitals. To increase its leverage with vendors, a GPO often selects only certain manufacturers and vendors of a product to include in its catalog. According to GPOs, this selection of some vendors and exclusion of others reflects judgments about both product quality and price.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 30, 2002
- Accession Number
- ADA401025
Entities
People
- William J. Scanlon
Organizations
- United States Government Accountability Office