Expanding their horizons
GPO survey shows purchasers venture into new directions, such as education
Modern Healthcare’s seventh annual Group Purchasing Survey shows that GPOs continue to diversify their offerings of services beyond traditional supplier contracting in an effort to address the growing demands of their members, who are grappling with a healthcare system under reform.
Among the nontraditional services that group purchasing organization survey participants indicated they now offer are continuing medical education, environmentally preferred contracting, technology assessment and clinical quality benchmarking (See chart, p. 26).
“We’ve expanded our services into areas like productivity and labor management, consulting services like revenue-cycle improvement, IT implementation—anything that would address cost concerns,” says Randall Walter, executive vice president of enterprise solutions for St. Louis-based GPO Amerinet.
This year Modern Healthcare made revisions to the annual survey in response to recommendations made by GPOs through the Health Industry Group Purchasing Association. The questionnaire was simplified and reduced to 18 multipart questions from 43 multipart questions. In addition, the new survey includes a section where GPOs are asked to identify the range of services they provide to members. Respondents were also asked to provide verifiable documentation to support the financial figures reported in their survey responses.
The surveys were sent to GPOs and were also made available online between April 26 and July 9. Six GPOs completed the survey, and 11 declined to participate (See chart, p. 28).
“There wasn’t a need for us to participate in the survey because Premier makes virtually all of this information available on our public website,” Mike Alkire, Premier’s president, said in a written statement. “Moreover, we’re uncomfortable with the methodology but look forward to working with Modern Healthcare to improve it.”
Eleven GPOs completed surveys in 2009 and 16 participated in 2008.
In addition, Modern Healthcare hosted a conference call on Aug. 9 with the survey participants to discuss their responses.
Of this year’s six participating GPOs, MedAssets had the highest member purchasing volume in fiscal 2009, accounting for some $24 million in goods and services bought by healthcare providers compared with $19 million in 2008 (See chart, p. 27). Amerinet, which had the second-highest purchasing volume among survey participants, accounted for $7 million in member-purchased goods and services compared with $6.6 million in 2008.
Only one of the reporting six GPOs—Hospital Purchasing Service—is a not-for-profit organization. Four are private, forprofit companies and one— MedAssets—is a publicly traded, for-profit company.
Regarding services, Amerinet and MedAssets indicated offering the widest variety of services with some distinction between the two companies. Amerinet, for example, does public policy work on behalf of its members where MedAssets doesn’t. MedAssets, however, provides warehousing services where Amerinet does not.
Based on post-survey conversations with participating and nonparticipating GPOs, a broadening of services beyond contracting appeared to be a significant goal of GPOs during the past year. Many pointed to healthcare reform as the catalyst for their expansion into new service areas such as comparative effectiveness and accountable care organization development.
Even before the passage of healthcare reform, legislators sent a strong signal that comparative effectiveness—using postmarket patient-outcome and cost data to guide treatment decisions—would play a significant role in the new healthcare system. To date, approximately $3.7 billion has been allocated under the American Recovery and Reinvestment Act of 2009 and healthcare reform legislation to the development of comparative effectiveness research. Some of that money will be used to contract with agencies to perform such research.
Eugene Schneller, a professor of supply-chain management at Arizona State University’s W.P. Carey School of Business, says he expects to see GPOs not only using comparative-effectiveness data to guide their members’ acquisition of medical products, but also developing research for the national database that will eventually be created. “If they don’t do it, they’ll be at a real disadvantage,” Schneller says of GPOs.
The need for providers to build new caredelivery systems is presenting a challenge to GPOs—one that several say they are gearing up to tackle.
“GPOs will need to look at how hospitals can deal with bundled payment,” says Nicholas Sears, chief medical officer for the Alpharetta, Ga.-based GPO MedAssets. Sears says he believes providers will look to GPOs for guidance in setting up workable ACOs, which will share payer reimbursement and responsibility for a patient’s care. “We’ve gone down the path of looking at the revenue side of things, which is why I think we’re particularly well-suited to help hospitals with efforts to form ACOs,” Sears says.
Walter: “We’ve expanded our services into areas.”