Groups see more use of pacts, target alternate sites. 1991 group purchasing survey

Purchasing groups and alliance purchasing programs accounted for $11.1 billion in goods and services bought by hospitals last year, according to MODERN HEALTHCARE's 1991 group purchasing survey. Trends included the folding of additional hospital departments into central purchasing and increased targeting of alternate-site markets. The responses also documented significant growth and realignment in the industry.     

Hospitals leave national GPOs to create their own competitive contracts

Hospitals cut better medical/surgical supply deals in smaller, innovative group purchasing networks. Meridian Health System in New Jersey posted an annual $1.5 million savings by renegotiating about a dozen of its supply contracts over the past year. By ditching memberships with the big GPOs and creating its own group purchasing cooperative, administrators there are cutting competitive deals. Find out how they're doing it.     

Environmental and Organizational Factors Associated with Hospital Use of GPO Services

Abstract

Given the potential benefits of Group Purchasing Organizations in cost-containment efforts for hospitals on supplies and purchased services, an important question that remains unanswered is what conditions support or hinder the utilization of GPOs by hospitals. Therefore, this study explores the relationship between GPO use by hospitals and their market and organizational characteristics. Data on hospital GPO utilization and other organizational characteristics were combined with secondary hospital market characteristics. Panel logistic regression with random effects and state and year fixed effects analysis was used to examine the relationship between hospitals’ utilization of GPO services and hospitals’ organizational and market characteristics. Overall, the majority of hospitals utilized the services of GPOs. Specifically, the number of hospitals utilizing the services of GPOs increased slightly from 3290 (72.2%) in 2004 to 3337 (74.4%) in 2013. In regression analyses, hospitals utilizing the services of GPOs operated in an external environment with mixed levels of munificence, more dynamism, and less competition. Specifically, hospitals operating in a less munificent environment are more likely to utilize the services of GPOs. The study findings provide organizational decision-makers and policymakers’ insights into how certain market and organizational factors influence hospital strategy choice, in this case, the use of GPOs.     

Alternate care sites. The challenges for GPOs, suppliers and materiel management

As the United States healthcare delivery system evolves, the alternate care site market is creating challenges and opportunities for materiel managers, groups and alliances. To be effective, an alliance or GPO must provide value. Many network integrators are setting up wellness and "telephone triage" programs to keep people from entering the continuum of care at all. Alternate care sites will face the same cost constraints presently being felt in many hospitals. GPOs and alliances will therefore have to provide value to these sites in ease of use, meaningful benefits, easy administration, and working with the network and distributors. Materiel managers can play an important role by developing product standardization among sites, rationalizing distribution to sites by using one or perhaps two distributors to serve all of the alternate site providers in the network, using group contracts to lower acquisition prices and providing greater services.     

医院物资采购供应信息化管理实践

物资采购管理水平的高低,直接影响医院的社会效益和经济效益.在医院经济管理改革实践中,本院不断优化物资采购流程,整合完善物资管理软件系统,提高了物资采、供、管效能,实现了物资的采购计划、领用和出入库管理网上运行,有效提高了医院物资管理的自动化程度.     

美国集团采购组织分析及对我国药品采购的启示

本文采用文献研究法,详细地分析了美国集团采购组织的基本特质及其对医疗卫生体制的影响。主要内容包括集团采购组织在美国的发展历程、组织类型、基本职能、采购药品的流程及其主要费用来源,集团采购组织的特点及对医院、供应商、监管机构产生的影响。研究认为,集团采购组织为美国医疗保健提供方节约了大量成本,在医疗供应链中发挥着重要作用。建议创新与完善我国药品采购制度应更大范围、更深程度地引入市场机制,妥善协调政府与市场在药品采购中的作用;并科学设置评标方法,兼顾药品质量与价格要素,注重采购的经济实用性。     

Maintaining the flow. In a changing market, GPOs work to keep customers happy.

In the rapidly changing group purchasing market, GPOs are focusing on customization to draw new customers and satisfy the ones they have. One particularly daunting challenge for GPOs involves coronary stents. These tiny devices can amount to big dollar volume, but price isn't the only issue.     

Commoditization of the international teleradiology market

Telemedicine improves access to medical care. However, telemedicine will also increase market volatility because of its ability to stimulate price competition and the insidious way it shifts liability for providing medical services. To cope with increased volatility, other economic sectors have evolved commodities markets by making greater use of standardized forward/future contracts. In the past, the need for medical services to be produced and consumed locally and a lack of an objective definition for medical quality, prohibited the use of forward contracts for health-care services. However, telemedicine, and the increasing use of statistical definitions of medical quality now make standardized forward contracts for health-care services conceivable. Commoditization of teleradiology would offer several advantages including increasing market transparency, a mechanism for ensuring medical quality, and a means for bringing capital into the health-care sector. To reap the benefits of a commodities market in teleradiology, the key will be for market stakeholders to overcome their fear of the unknown in order to organize a central exchange.     

Group purchasing survey. Purchase groups buy goods worth over $15 billion

Members of purchasing groups bought $15.4 billion in goods and services last year, according to the 62 respondents to Modern Healthcare's 1992 purchasing survey. Members of 37 groups that reported volume for both 1990 and 1991 bought $14.3 billion in goods and services, a 25% jump. Some of the biggest gains were reported by groups that focused on increased contract use rather than new members.     

Paying for efficiency: what price the quality of hospital care?

Abstract: Economic recession prompts governments and health service ministers to seek increased efficiency in the production of hospital services in order to reconcile increasing demands with scarce resources. As one approach to the problem, the National Health Strategy is recommending pilot schemes, similar to those which have been introduced in both the United Kingdom and the Netherlands, which involve the separation of purchaser from the provider of hospital services. It is argued that such separation, with the introduction of competition between providers of hospital services for contracts placed by publicly funded Area Health Boards, will increase efficiency and accountability in the use of resources. However, this argument ignores the hospital management's ability to keep costs down by altering the quality of hospital care in ways which are difficult to monitor by purchasing agencies. The article considers the effects the introduction of managed competition is likely to have on the quality of hospital services. The outcome is uncertain and competition may improve some dimensions of quality while jeopardising others. If managed competition is tried in Australia, the opportunity should also be taken to examine its impact on the quality and outcomes of hospital care.     

Emerging contract incentives can add to hospitals' savings

Group purchasing organizations are trying to draw more volume out of their hospital members by offering additional price breaks if purchases meet performance targets, says John Henderson. The purchasing groups see the approach as a way to keep their promise to manufacturers of volume in return for discounts.     

Reconstitution of the not-for-profit hospital: new ethics, new equity

In meeting the challenge of economic competition, the not-for-profit hospital has made two significant responses: corporate reorganization and formation of multihospital systems. However, an additional response is needed to improve access to equity capital. This can be achieved by separating the hospital into a not-for-profit entity that contains nursing care, administration, and support services and a series of economic partnerships with members of its medical staff and other investors for provision of ancillary diagnostic and treatment services. Additionally, it is proposed that the parent holding company add an insurance arm, form a primary care network, and vertically integrate all modalities of care.     

Contracting for services and limits to managed competition

The introduction of market forces into the NHS has led to an operational divorce between health care providers and those who need health-care. Central to this change has been the widespread use of contracts. As a management problem, contract negotiation must incorporate consideration of full cost recovery to establish prices for hospital services sold and to ensure that available information is employed in assessing external services purchased. Ignoring the important issue of information availability in identifying relevant costs, it is the difficulty in specifying the cost of an episode of treatment, for example, that has led to contracts being negotiated in block form. Argues that this may be the only contract that can be effectively established. An important consequence of this is that the complexity of hospital services and requirements will work against a wider implementation of piecemeal managed competition and will form a natural barrier to market forces in the NHS.     

Regional not-for-profit systems: can they compete with national investor-owned firms?

The relative competitive advantages of regional and national systems are summarized in Figure One. As illustrated, each type of system has unique competitive advantages at the corporate level. While it is difficult to state that either system has distinct advantages that place it in a superior position relative to the other, it seems that in the short-run investor-owned systems have operating characteristics that may result in more efficient internal functioning because of more centralized control over resource allocation and performance systems, greater possibilities for economies of scale, and greater access to capital. However, it was previously noted that growing pressures from government and the business community will lead to tighter constraints on the profitability of investments in the health care sector. The possibility of this shift suggests that the access to capital advantage enjoyed by investor-owned systems may not continue. Additionally, regional systems that are part of larger affiliated organizations such as the Sun Alliance and the Voluntary Hospitals of America are developing means to pool their access to debt funds, thus reducing the cost of capital for member institutions. The group purchasing contracts developed by these large systems also have resulted in significant savings. The distinction between regional and national systems on centralized control are becoming less pronounced. Investor-owned systems are seeking to determine how they might best decentralize selected decisions to be more responsive to local markets while not-for-profit regional systems are recognizing that they must centralize selected decisions to obtain more efficient, rational operation. The long-run outlook suggests that the competitive advantages that have been identified will become less pronounced and that both systems will survive in the marketplace.     

Should general practitioners purchase health care for their patients? The total purchasing experiment in Britain

Until relatively recently, general practitioners (GPs) have been allowed to work independently, with no requirement to consider the resource implications of their referral and prescribing decisions. In order to align the interests of GPs with the overall objectives of health systems a number of countries have introduced primary care based capitation, funds pooling and budget holding either as experiments or as an overall policy. Are these experiments and policies likely to work? This paper presents evidence from the UK total purchasing experiment, which was the first major quasi-market development in the NHS to be independently evaluated from the outset. Total purchasing gave volunteer groups of practices freedom to purchase all hospital and community health services for their patients. The evidence suggests that whilst GPs have great potential as purchasers, they also have considerable limitations. The expectation that they will be able to improve the quality of patient experience of care, or to alter the use of resources, may not be generally realised. GP-based purchasing may be more appropriate where the task is to alter the balance or location of care between hospital and extramural settings. However, budgetary incentives are not 'magic potions' which have similar effects on behaviour wherever they are introduced. Holding budgets and having independent contracts, while important pre-requisites for being taken seriously in a quasi-market, were not sufficient for effective total purchasing. The paper concludes that health systems should not only value innovation and experimentation and encourage learning from evaluative research; they should also recognise the importance of supportive circumstances for any innovation to effect real and sustained change.     

Purchasing groups struggle to keep pace with members

Hospital alliances and group purchasing organizations don't plan to stand still while mergers and acquisitions transform their traditional hospital members into integrated healthcare systems. Included are some survival strategies of the 10 largest groups responding to Modern Healthcare's 1995 group purchasing survey.     

GPOs under pressure to deliver. Purchasing volume climbs, but Internet firms and independents are challenging the large groups

Group purchasing organizations saw another year of increased volume in 1998, according to Modern Healthcare's annual survey of the sector. But in many cases, customers are going off on their own, becoming competitors to the large GPOs. Fledgling Internet firms also are offering new purchasing options.     

Venturing into new territory--health systems as Medicare risk contractors

With each congressional budget debate, hospital and health system executives are reminded of their vulnerability to Medicare reimbursement rates. As health maintenance organizations (HMOs) have entered into Medicare risk contracts and negotiated separate hospital reimbursement rates, hospital and health system executives have recognized even less control of their Medicare reimbursement. One way for health systems to regain control of the Medicare dollar is to develop a Medicare risk contract that directly receives and distributes the Medicare risk premium. Before hospital and health system executives invest in the start-up and operational capital necessary to bid for a risk contract, careful analysis of the efficacy of the contract's contribution to the margin should be undertaken. The following will review observations and lessons from HMO Medicare risk contracting and introduce a methodology that health system executives can use to evaluate the annual financial impact of entering the business of direct Medicare risk contracting.     

Trends in health care financing: opportunities for family planning agencies

In response to spiraling health care costs in the US, several alternative health care delivery systems have evolved. The delivery of subsidized family planning services in particular is being affected by declining levels of government support. The most rapidly growing of alternative delivery systems is the health maintenance organization (HMO). HMOs provide a voluntarily enrolled population a guaranteed, specific range of physician and hospital services in return for a fixed periodic payment. There are 3 types of HMO: the group model, in which doctors are members of a partnership or service corporation that contracts with employers or individuals to provide medical services; the taff model, in which physicians are direct employees of the HMO; and the independent practice association (IPA) model, a physicians' group that enters into a contract with an HMO and receives reimbursement for every patient seen. In 1986, over 21 million Americans were enrolled in approximately 262 HMOs around the country. HMOs are unequaled in their success at reducing hospital utilization; they have achieved savings of hospital costs of 20-40%. Another system for delivering and financing health care is the preferred provider organization (PPO) under which patients are assigned to a designated panel of health care providers who offer services according to a discounted fee schedule. New hybrid systems that combine many of the features of both systems are emerging. Most of the newly organized health care delivery systems described focus on utilization control and keeping costs down. A common way of ensuring coordinated health care delivery is through primary care case management. To initiate or establish relationships with HMOs or other health care delivery systems, family planning agencies should consider such activities as: undertaking surveys to study the market; training new employees on developments in health care financing; and recruiting board members with HMO experience.     

Physician practice management companies: implications for hospital-based integrated delivery systems

Physician practice management companies (PPMCs) are one of the most visible entrants into the industry of managing physician practices, and anywhere from 100-150 are already in operation. Although PPMCs and hospital-based integrated delivery systems (IDSs) differ from each other in many ways, they share a number of common features, including the pursuit of capitation contracts from payors. As a result, PPMCs pose a growing, direct threat to hospital systems in competing for managed care contracts that cover physician service. PPMCs also provide an alternative to hospital-based IDSs at the local market level for physician group consolidation. This article looks at the structure, operation, and strategy of PPMCs and examines what implications their growth will have for hospital-based IDSs.