The Healthcare Supply Chain Association (HSCA) and its healthcare group purchasing organization (GPO) members convened a Capitol Hill briefing discussion recently with Hill staff and leading healthcare academics and supply chain experts to discuss the cost savings benefits of GPOs, transparency in the healthcare supply chain, and the role of GPOs in helping to mitigate drug shortages. The panel featured Dr. Lawton Burns, Chair of the Health Care Management Department at the Wharton School at the University of Pennsylvania, and Dr. Eugene Schneller, Professor in the School of Health Management and Policy at Arizona State University.
“GPOs save hospitals on average 19 percent or $36 billion annually on non-labor supply costs, and additional savings above that on human resource costs,” said Dr. Schneller. “Hospitals are prudent shoppers, and not just for goods and services, but for their GPOs. Hospitals hold their GPOs accountable for pricing.”
Virtually all of America’s 5,000+ hospitals, as well as nursing homes, long-term care facilities, and other healthcare providers rely on group purchasing organizations to provide the best products and services at the best value. GPOs aggregate the purchasing power of their members to achieve significant cost savings.
“GPOs are hospital-based and hospital-focused. Hospitals are now facing even greater budget pressures and expect to use their GPOs even more to help cope,” said Professor Burns. “GPOs are private sector solution to healthcare cost containment. The GPO model works and any change to it would have significant unintended consequences for hospitals.”
For more information on the benefits of GPOs, challenges facing the supply chain, and the research of Professors Burns and Schneller, please visit www.supplychainassociation.org
