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What does my hospital offer a group purchasing association?

In the past, group purchasing organizations sought to sign up as many hospitals as possible. The purchasing power of these organizations is often quite impressive. However, unless these groups enhance market share for the manufacturers, they cannot expect significant price breaks. The quality, compliance, of the group is, therefore, as important as the membership numbers. The author details quality assessment criteria for members of group purchasing organizations and recommends their review by both members and non-members alike. This assessment focusing on both internal and external factors will indicate the hospital's value to a purchasing group and, by extension, the material manager's benefit to the hospital.

Hospital Shared Services↗

Economies of purchasing group size.

The relationship of drug price and purchasing group size was evaluated. Thirty drug line items were studied in 26 private hospital purchasing groups of various sizes. Prices were analyzed relative to purchasing group size, age, and location. Drug prices were negatively correlated to group size in a linear relationship. Prices were significantly lower in groups representing greater than 10,000 beds. No significant relationship was found between group age or location and drug prices. The theory that increasing purchasing group size will result in better contract prices was supported.

Hospital Shared Services↗

The effectiveness of group-purchasing organizations.

The prices paid for routine medical supply items by six hospital group-purchasing systems and a control group of 24 nonaffiliated hospitals were compared to determine the effects of group purchasing. Each of the six group-purchasing systems obtained lower prices for supply items used in the study, ranging from 12 to 26 percent average savings. The enforcement of written contracts among the plan's members and the percentage of plan member participation appeared to explain effectiveness. Size of the plan and volume of purchases did not influence the percentage of saving realized among the groups.

Costs and Cost Analysis↗

Group purchasing of food items maintains quality, cuts costs.

Hospital food group purchasing programs face problems that other kinds of group purchasing programs don't have. HARICOMP, a not-for-profit hospital shared services corporation, helped a group of Rhode Island hospitals solve some of these problems by using computers. The computers eliminate much of the time-consuming effort involved in making price comparisons, holding sales meetings, and doing paperwork.

Computers↗

Private brand labels of hospital associations and purchasing groups.

Some hospital associations and purchasing groups are negotiating contracts with the manufacturers of basic, large volume surgical, housekeeping, and maintenance supplies which permit the associations to package the products under their own label. This apparently gains some cost advantages as well as group recognition. Dr. Decker discusses some legal concerns that should be addressed before such a program is undertaken.

Commerce↗

Pharmaceutical group purchasing cuts costs, expands knowledge.

The CHA-CSHP pharmaceutical group purchasing program has provided several benefits to participating hospitals and related institutions in Connecticut. The program is run by pharmacists and staffed by individuals knowledgeable in good purchasing techniques. Pharmacist compliance has been good because of maximum input into program decisions by all participating pharmacy departments. Pharmaceutical industry participation has been excellent, because each bid invitation includes information on the previous year's purchases by participating hospitals and on the committed volume for the contract period. In addition, the program is self-supporting. Thus, larger hospitals, which would often be able to obtain good pricing independently, are not obliged to support the bulk of this program, as is often the case when participating institutions pay dues based on their bed size. As a result of the pharmaceutical group purchasing plan of the Connecticut Hospital Association, hospitals have received significant benefits in cost savings and shared drug information.

Connecticut↗

Purchasers' group 'leapfrogs' to quality.

Group hopes purchasing power or members will spark changes. What happens when big health care purchasers like AT&T, Boeing, Caterpillar, Delta Airlines, Eli Lilly, Ford, General Motors, and IBM get together and voice an opinion about the quality of health care? Hospitals listen. At least that's the theory behind the Leapfrog Group, an organization sponsored by the Business Roundtable and including some 70 companies that hope to improve safety in health care by alerting patients to key features of hospitals around the country.

Health Benefit Plans, Employee↗

Group purchasers must take new risks to achieve success.

In this article, Henderson shares his perceptions of the group purchasing market and the issues affecting groups and their negotiations with vendors, concentrating on vendors' reactions to changing market forces. He discusses where group purchasing is today and where it is going.

Commerce↗

Integration and standardization within the Mayo Foundation Laboratories: the centralized laboratory purchasing group.

Integration and standardization of laboratories throughout a medical system can increase the efficiency and effectiveness of laboratory operations. This task is challenging in most health-care systems, as no central governance exists to compel laboratories to standardize and integrate. We describe the initial collaborative efforts to integrate and standardize the laboratories of the Mayo Foundation, which includes more than 60 laboratories of different sizes in diverse locations. The goals and objectives of the group formed to develop this initiative--the Centralized Laboratory Purchasing Group--its origin, and lessons learned are described. Similar initiatives by other academic medical centers and community health-care systems to integrate and standardize their laboratories are discussed. Successful standardization and integration increases the value of the laboratory to the larger health-care system by demonstrating accountability, efficiency, and effectiveness, and can result in considerable cost savings to the entire health-care system.

Academic Medical Centers↗

Cost savings through formulary implementation and group purchasing in four therapeutic categories.

The effects of implementing a closed formulary system and group purchasing in a 343-bed, private, nonprofit community hospital were evaluated by use of price and value indexes. Four therapeutic categories were analyzed: antihistamines and decongestants, antitussives, antacids, and topical corticosteroidal creams and ointments. Overall savings in the four therapeutic categories evaluated totaled $681.33. The findings indicated differences in cost may exist between formulary and nonformulary drugs, but the direction and magnitude of that difference vary with the therapeutic category. The impact of group purchasing affiliation on overall purchase cost is discussed and additional cost-control methods are presented.

Costs and Cost Analysis↗

Hospitals, group purchasing organizations, and the antitrust laws.

Hospital members of group purchasing organizations should ensure that their GPO's business practices do not restrain trade. Hospitals should monitor their GPO to minimize their antitrust exposure. GPOs and their hospital members should assess administrative fees, bundling arrangements, duration of contracts with suppliers, and product-breakthrough policies in relation to their impact on competition and product innovation. GPOs and their hospital members should closely monitor activities of federal and state antitrust agencies in light of the agencies' renewed antitrust concerns.

Antitrust Laws↗