The Government Accountability Office (GAO) released its official report today on GPOs titled “Group Purchasing Organizations: Services Provided to Customers and Initiatives Regarding Their Business Practices”. The report details the comprehensive, industry-leading steps taken by GPOs to ensure transparency, fair contracting, and discount product pricing for American hospitals. The report confirms what the 8th Circuit Court of Appeals, U.S. Department of Justice, the Federal Trade Commission, and virtually all of the 5,000+ American hospitals have already found – GPOs reduce costs for hospitals.
GAO interviewed the six largest GPOs, as well as several hospitals and device vendors, and determined that hospitals increasingly rely on GPOs as the primary means to help keep the costs of medical products and services in check. Key GAO findings include:
· 90% of hospitals voluntarily contract with GPOs using an average of 2-4 GPOs per facility;
· GPOs distinguish themselves in a highly competitive marketplace by offering a broad range of 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;
· All GPOs have in place programs to evaluate innovative technologies that could provide a meaningful benefit to patients, and can take steps to rapidly introduce these technologies in the marketplace;
· In 2005, in consultation with Congress, group purchasing organizations created the Healthcare Group Purchasing Industry Initiative (HGPII), which has successfully led to increased transparency in contracting, increased number of multi-source contracts, and to the development of technology innovation provisions by all GPOS interviewed;
· 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.
At the request of Congress, the GAO previously reviewed existing peer-reviewed and non-peer reviewed academic literature and articles about the impact of GPOs on pricing for hospitals. All GAO-reviewed literature confirmed that GPOs reduce health care costs for hospitals by lowering product prices.
The GAO report clearly demonstrates the group purchasing industry’s firm commitment to remaining the most transparent industry in health care. The report affirms that our aggressive efforts have yielded increased transparency and low administrative fees in health care contracting, the second largest expense for hospitals after the cost of labor.
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: GPOs save money.
To read the full text of the GAO report on the group purchasing industry please visit: