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This week, the federal courts joined the Department of Justice, Federal Trade Commission, General Accountability Office and American hospitals in recognizing the benefits that GPOs provide to the U.S. Healthcare system. The 8th Circuit Court of Appeals (Southeast Missouri Hospital v. Bard Inc.) found that GPOs save hospitals money (a fact already communicated by the hospitals themselves; click here to see a letter signed by over 550 hospitals and here to see individual letters from providers), that hospital GPO membership is voluntary, and that that there is “fierce competition” to get on GPO contracts that results in hospitals paying 16 percent less on average for medical devices and services. The 8th Circuit Court of Appeals decision focuses on anti-trust issues and also reinforced elements that are essential to understanding the GPO industry:
It is worth noting that the issues raised in this case are the same allegations consistently raised by a handful of discontented suppliers and their supporters that have waged a legal, lobbying and public relations campaign against GPOs. The message of this highly orchestrated campaign has suggested a conspiracy between large suppliers and GPOs to— among other things— inflate prices for hospitals and the government. Fortunately, in their exhaustive review of these allegations, the U.S. Department of Justice, Government Accountability Office, the Federal Trade Commission and now the U.S. Court of Appeals have all found conclusively that these claims are false. The fact is that GPOs do save hospitals, patients, and therefore the government and taxpayers, money.
Not unlike the popular movie genre it may be too much to hope for to think that the zombie is actually dead this time. As hospitals across the country continue to face down budget crises, they must increasingly rely on proven methods to contain costs. GPOs have withstood the test of time. In fact, this year the GPO industry celebrates its 100th anniversary. Now that this case is behind them, GPOs can look forward to working with their trusted supplier partners to serve their hospital members and customers and move forward in implementing the cost and quality imperatives contained in the most recent health care reform efforts.