Why all the fuss about GPOs?

To the Editor,

There have been a number of misconceptions spread around the industry about my work and position related to GPOs. I am writing this letter to set the record straight.

By now it is no secret that our nation's hospitals and our entire healthcare system are on the verge of a potential tidal wave of new consumers of high volume healthcare services. Estimates are that 78 million baby boomers and up to 45 million uninsured (depends on whose numbers you believe and whose healthcare plan will win out) will soon come on fine. Someone will have to pay for all of that and with the government's limited resources it is pretty clear that hospitals, many of whom are already in dire financial straits, can expect little help from the government even as they are expected to take on a burgeoning healthcare population. In response to this conundrum experts and interested parties from every walk of life are trying to figure out how to get more healthcare blood out of the hospital turnip.

Non labor expenses account for as much as 45 percent of a hospital's operating budget and the people in charge of supply chain management have responsibility for much of it. In light of healthcare's challenges it would be irresponsible for hospital CEOs, CFOs, and Directors of Materials Management to fail to re-evaluate all aspects of their supply chains in order to reduce cost as much as possible. And although it is certainly uncomfortable for some Group Purchasing Organizations are clearly part of the healthcare supply chain. The goal of the work we should all be doing is not to denigrate the past successes of GPOs. It is abundantly clear that in the 1980's and 1990's GPOs played an enormously critical role in controlling supply and equipment costs and for that they should be recognized. No one, including me, could honestly say otherwise. But the past successes of GPOs do not automatically insure future ones. If we look closely we can see that the marketplace landscape has changed and the financial challenges now stepping onto healthcare's doorstep are larger and more complex than we have ever faced before. So we must ask the hard questions and we must understand if GPOs are still saving money today like they did before. Do their results still warrant the protections of a Congressional Safe Harbor or are there other ways to compensate them for the work they do and the value they provide? Some of the GPOs have been doing outstanding work in other areas that perhaps hospitals should value enough to pay for separately out of their own pockets.

HIGPA and some of the GPOs have attempted to paint me as anti GPO. I ask hard questions that GPOs seem to have a harder time answering. That does not make me anti GPO. I am not out to get GPOs, as some would suggest, and believe that only the market can determine the future role of GPOs in the healthcare supply chain. What I am is pro supply chain, pro hospital and pro competition. To me, the question is not whether GPOs should exist but rather what work they should do and how they should be compensated for it. After all, our government changed the laws of commerce to give GPOs special rights and protections. Don't they at least owe the taxpayers a reasonable accounting of the results they produce? And don't hospitals owe it to their patients, caregivers, physicians, and communities to make sure that their GPOs are acting in their best interests and producing the results they have promised?

Sincerely,

Lynn James Everard, C.P.M., CBM Healthcare Supply Chain Strategist and Consultant Coconut Creek, FL

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