Re­form prompts GPOs to re­con­sider ser­vices, busi­ness model

With health re­form, GPOs face many chal­lenges and changes, but step one might be pin­ning down a def­i­ni­tion

Modern Healthcare - - Front Page -

Singer-song­writer Bob Dylan has al­ways been re­garded as a bit of a prophet. But no one could have guessed in 1964 when he wrote “you bet­ter start swim­min’ or you’ll sink like a stone/for the times they are a-changin’ ” that 45 years later those lyrics would be­come a sage warn­ing for U.S. health­care busi­nesses.

Multi­na­tional drug com­pa­nies, in­de­pen­dent hos­pi­tals, in­sur­ers and other or­ga­ni­za­tions along the health­care con­tin­uum are sort­ing out how they will be af­fected by re­form and what they will look like af­ter the winds of change have passed through. Health­care group pur­chas­ing or­ga­ni­za­tions are no ex­cep­tion, so in con­junc­tion with its an­nual GPO in­dus­try sur­vey, Mod­ern Health­care de­cided it was a good time to con­sider how the group pur­chas­ing in­dus­try is nav­i­gat­ing the early days of health­care re­form.

Ex­ec­u­tives at small and large GPOs say they are tak­ing long, hard looks at their busi­ness mod­els. They are ask­ing what changes in fo­cus and ser­vices need to be made to help their provider mem­bers pros­per un­der a new sys­tem.

“I think the GPOs that don’t morph are go­ing to be looked at askance,” says Ni­cholas Sears, chief med­i­cal of­fi­cer for the Al­pharetta, Ga.-based GPO MedAs­sets. “The old GPO model I don’t think will be around in 10 years.”

To be cer­tain, the old model—where GPOs did lit­tle be­yond ne­go­ti­at­ing low­est pos­si­ble pric­ing on sup­plies and ser­vices pur­chased by their mem­bers—has long been con­sid­ered an­ti­quated. GPOs still earn most of their rev­enue on con­tract­ing ser­vices—roughly 60%, ac­cord­ing to Huron Con­sult­ing Man­ag­ing Di­rec­tor Sean Angert—but the vast ma­jor­ity, if not all GPOs, of­fer a ros­ter of ad­di­tional ser­vices meant to help hos­pi­tals lower costs, im­prove qual­ity and trans­form their care- de­liv­ery sys­tems. Those ser­vices in­clude ev­ery­thing from staffing and work­flow an­a­lyt­ics to eval­u­at­ing the clin­i­cal and cost ef­fec­tive­ness of med­i­cal prod­ucts, bench­mark­ing qual­ity of care and man­ag­ing hos­pi­tals’ out­sourced pur­chas­ing ser­vices.

Still, health­care in­dus­try an­a­lysts say they ex­pect con­tin­ued and sig­nif­i­cant changes to GPOs’ busi­ness mod­els over the next sev­eral years as health re­form leg­is­la­tion is im­ple­mented.

“I see GPOs shar­ing more of the risk” for achiev­ing sav­ings, says Paul Keck­ley, ex­ec­u­tive di­rec­tor of the Deloitte Cen­ter for Health So­lu­tions. Keck­ley says tight­en­ing re­im­burse­ment will force providers and GPOs to de­velop cre­ative com­pen­sa­tion ar­range­ments, par­tic­u­larly for ser­vices other than con­tract­ing. As a re­sult, in­stead of re­ceiv­ing flat fees for ex­e­cut­ing qual­ity-im­prove­ment and cost-sav­ing pro­grams for their mem­bers, GPOs are likely to be com­pen­sated based on the suc­cess of those pro­grams. That could mean, for ex­am­ple, that a GPO would share a por­tion of the sav­ings achieved through a clin­i­cal-prod­uct waste-re­duc­tion pro­gram in­stead of re­ceiv­ing a flat fee for their ser­vices.

Keck­ley also ex­pects some GPOs to move into of­fer­ing pur­chas­ing ser­vices for busi­ness lines that aren’t con­sid­ered part of con­ven­tional med­i­cal care. “I ex­pect dis­cus­sions about tip­toe­ing into ar­eas like dis­pens­ing, op­tom­e­try, well­ness cen­ters and med­i­cal fit­ness cen­ters,” he says. “There are things out­side of health­care re­form’s reach, where GPOs can be­come pur­chasers (for) or even op­er­a­tors of these kinds of fa­cil­i­ties.”

Lee Perl­man, pres­i­dent of GNYHA Ven­tures, the GPO for the Greater New York Hos­pi­tal As­so­ci­a­tion, agrees, say­ing he sees the role of GPOs broad­en­ing un­der health­care re­form. “Cer­tainly we—and I know my com­pe­ti­tion as well—are look­ing at things in a much more ex­pan­sive way,” he says. “I be­lieve very strongly that when you look at what’s go­ing to hap­pen in the fu­ture, it’s im­por­tant to have ser­vices be­yond the acute-care world. We need to em­power hos­pi­tals to pro­vide ser­vices be­yond dis­charge,” Perl­man adds. He notes that his GPO is look­ing to ex­tend its ser­vices into home-care mon­i­tor­ing and other post-dis­charge mar­kets.

Keck­ley ex­pects some GPOs to push the bound­aries of their ser­vices even fur­ther by act­ing as ne­go­tia­tors of fi­nanc­ing terms on their provider mem­bers’ cap­i­tal equip­ment pur­chases or pos­si­bly be­com­ing the fi­nancier of such pur­chases. “I don’t think they’ve set­tled yet on ex­actly what they think the new nor­mal will be for them,” Keck­ley says of GPOs’ fu­ture.

But the idea of cre­at­ing a new nor­mal may be a leap for an in­dus­try where, as sup­ply­chain ex­perts say, “If you’ve seen one GPO, you’ve seen one GPO.”

Be­yond con­tact­ing ser­vices, the menu of pro­grams and con­sult­ing ser­vices of­fered by GPOs to their mem­bers varies widely. Where, for ex­am­ple, one GPO places ex­ten­sive re­sources into the devel­op­ment of clin­i­cal qual­ity pro­grams, an­other is heav­ily in­vested in rev­enue-cy­cle man­age­ment and still an­other in clin­i­cal-la­bor-man­age­ment pro­grams. As a

Sears: “GPOs that don’t morph are go­ing to be looked at askance.”

Keck­ley: “I see GPOs shar­ing more of the risk.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.