GPOs can reduce healthcare costs, improve sustainability

Group purchasing organizations drive down healthcare costs and can help bring new products to market, according to a new report.

The Healthcare Group Purchasing Industry Initiative's (HGPII) 11th annual report (PDF), which examines ethics standards and purchasing policies within the healthcare industry’s supply chain, found that GPOs have made notable strides in supporting diversity in the marketplace and sustainability efforts.

Phil English, national coordinator of HGPII, said in announcement that the report highlights that “rigorous adherence” to an ethical culture and internal controls can lead to benefits and savings for healthcare consumers. The organization, he said, represents groups that make facility purchases that account for 72% of the U.S. hospital spend. Its members include the Children’s Hospital Association, HealthTrust Purchasing Group and Vizient.

“The level of commitment from the HGPII GPOs to transparency and ethics is making a difference in containing costs and improving outcomes in this area of the broader healthcare delivery system,” said Byron Dorgan, a former senator and the national co-coordinator of HGPII.

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The report highlights some of the ways that GPOs push for new industry standards, including:

  • Supporting innovation in the marketplace: GPO members have a contracting process that allows them to bring new products to market, according to the report. This allows healthcare organizations to test potential innovations with members before selling them more broadly and can help smaller providers enter the national marketplace.
  • Setting diversity standards: HGPII is working alongside other GPOs to set standards that promote diversity through the healthcare sector’s marketplace.
  • Emphasizing sustainability: GPOs are voluntarily finding ways to prove that money spent by members is actually improving sustainability, and these groups are collecting data that can be used across the industry to set market sustainability standards, according to the report.