Highmark Health's GPO turns $42M profit on $1B in purchases

Pittsburgh-based Highmark Health's group purchasing subsidiary reported its first profit in 2015, according to the Pittsburgh Post-Gazette.

Health insurer Highmark launched its group purchasing organization, Provider PPI, about three years ago. The company represents hospitals in buying pharmaceuticals and surgical implants. Over the past three years, Provider PPI has helped member hospitals increase their average per medical case margin by 16 percent, according to the report.

Provider PPI has started to see financial success of its own as well, as the GPO reported a $42 million profit on $1 billion in purchases on behalf of its members in 2015.

Paul Gallagher, vice president of Provider PPI, told the Pittsburgh Post-Gazette the company's use of physician panels to guide purchasing decisions for the most costly hospital supplies, including artificial hip and knee joints, has led the company to success. Consensus on these high-cost products aid in negotiations with suppliers and also help improve patient care, said Mr. Gallagher.

WVU Medicine in Morgantown, W.Va., is Provider PPI's largest member. Steve Bowman, corporate procurement director at WVU Medicine, echoed Mr. Gallagher's thoughts on the importance of physician involvement.

"National group purchasing organizations — they do a good job with commodity products," Mr. Bowman told the Pittsburgh Post-Gazette. "But for physician preference items, you have to work close with physicians."

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