Group purchasing in healthcare continues to be under scrutiny from lawmakers in Washington, but as a senior supply chain officer, I don't understand what the noise is all about.
Lawmakers have become convinced that GPOs restrict the provider's choice and ultimately dictate what providers can select and use. This could not be further from the truth.
Yes, GPO members are encouraged to purchase on the GPOs contracts in order to get the best value. But providers will still make choices outside of the GPO contract portfolio when it is in the provider's best interest to do so.
If anything, the value that GPOs provide to their members has been diluted over the past decade, due to pressures from manufacturers, suppliers, and their related industry associations.
In the first decade of 2000, lawmakers forced a dramatic change in the way healthcare providers and their associated organizations contract for goods and services. In the course of doing so, providers have spent time and money analyzing and comparing group purchasing organizations, and GPOs have spent time and money adapting their business model to suit the lawmaker's demands. Meanwhile, the cost of goods continues to rise.