GPOs lower costs and boost competition, HSCA report finds

Group purchasing organizations reduce costs for healthcare providers, while promoting competition, according to a new report from the Healthcare Supply Chain Association.

For the report, three industry experts — including two former Federal Trade Commission leaders — conducted an in-depth economic and legal analysis of GPO business models and how they affect the healthcare industry.

Here are three main report findings.

  1. GPOs cut costs for healthcare providers, patients and taxpayers. Providers usually achieve 10 to 20 percent savings by using GPOs to negotiate lower prices and decrease transaction costs.

  1. GPOs promote competition. The supply procurement market is highly competitive in healthcare, as providers have numerous GPOs to choose from and sometimes use multiple GPOs concurrently.

  1. The current GPO funding model is the most effective system. GPOs' vendor administrative fee model yields cost savings and switching to a different funding mechanism would likely raise healthcare costs, according to the report.|

To view the full report, click here.

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