GAO, Senate question role of hospital supplies middlemen

Group Purchasing Organizations, "which effectively act as middlemen between hospitals, suppliers and vendors," received mixed reports from the Government Accountability Office and the Senate Finance Committee, CongressDaily reports. "Many GPOs are paid through fees from manufacturers and vendors rather than by hospitals directly. As a result, the industry has enjoyed a special safe harbor from anti-kickback laws. Senate Finance ranking member Chuck Grassley, who released a minority staff report Monday examining the business model, said GPOs have yet to supply enough data to show that they are actually helping to achieve savings for hospitals and other buyers. … In a separate but related report, the GAO proved more tempered in its findings, saying that a code of conduct developed by the GPO industry in 2003 has largely worked to rein in some of the shadier practices that threatened the industry." The six biggest GPOs account for more than $108 billion of the purchasing volume made by hospitals in 2008, the most recent year for which data is available" (DoBias, 9/28).

The Hill: "Grassley said there is no empirical data that Group Purchasing Organizations provide any savings to the Medicare and Medicaid programs, which reimburse the hospitals for the care they provide to their beneficiaries. ... 'Whether Group Purchasing Organizations are able to help save money on medical supply costs, or not, impacts federal health care spending,' Grassley said. 'There's no data with which to independently verify the effect, one way or another, and that's a shortcoming in the current system'" (Pecquet, 9/27).

Modern Healthcare: "According to the [GAO] study, GPOs have adopted industrywide codes of conduct to address potential conflicts of interest associated with their vendor-contracting practices and to tackle concerns that some vendors may be locked out of opportunities to supply products and services to healthcare providers. The impact of those codes met with mixed assessments from healthcare providers and vendors, however" (Rhea, 9/27).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.