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GAO-10-323R 1 (2010-01-29)

handle is hein.gao/gaobaanqy0001 and id is 1 raw text is: GA 0 Accountability Integity * Reliability United States Government Accountability Office Washington, DC 20548 January 29, 2010 The Honorable Charles E. Grassley Ranking Member Committee on Finance United States Senate Subject: Group Purchasing Organizations: Research on Their Pricing Impact on Health Care Providers Dear Senator Grassley: Hospitals and other health care providers use purchasing intermediaries-group purchasing organizations (GPO)-as a way to control the cost of various medical products. Through GPO-negotiated contracts, hospitals and other health care providers can purchase everything from commodities, such as cotton balls and bandages, to high-technology medical devices, such as pacemakers and stents.' By pooling the purchases of these products for their customers, GPOs are in a position to negotiate lower prices from manufacturers, distributors, and other suppliers, which may in turn benefit health care providers and, ultimately, consumers and payers of health care such as insurers and employers. Members of Congress and others have recently raised questions about the extent to which GPOs negotiate lower prices for health care providers. GPO and other trade associations have funded studies on the impact of GPOs.2 However, these studies have limitations.3 You asked us to review research on the impact of GPOs on pricing for hospitals and other health care providers. This report summarizes the peer-reviewed and nonpeer-reviewed literature on the impact of GPOs on pricing for hospitals and other health care providers that we identified in our literature review. 'A stent is a device used to provide support for tubular structures like blood vessels. It can be made of rigid wire mesh or may be a metal wire or tube. 2See, for example, E.S. Schneller, The Value of Group Purchasing - 2009: Meeting the Needs for Strategic Savings (2009); D.E. Goldenberg & R. King, A 2008 Update of Cost Savings and a Marketplace Analysis of the Health Care Group Purchasing Industry (2009); H. Singer, The Budgetary Impact of Eliminating the GPOs' Safe Harbor Exemption from the Anti-Kickback Statute of the Social Security Act. Two of the articles (Schneller, and Goldenberg & King) were funded by the Health Industry Group Purchasing Association and estimate savings that GPOs produce for hospitals or other providers and federal programs, respectively. The third study (Singer) was funded by the Medical Device Manufacturers Association and analyzes the expected effects on federal expenditures if certain statutory protections for GPOs were changed. 3For example, the study by Schneller relies on estimates of savings reported by hospitals in a survey, but does not report the survey response rate or how the respondents were selected, although the author states that smaller hospitals were underrepresented. In addition, the article states that because of variation in how hospitals calculated their savings, it is difficult to precisely estimate savings to hospitals nationally. The Goldenberg & King and Singer studies apply varying assumptions to national expenditure data to model the effects of GPOs on providers or federal expenditures. GAO-323R Group Purchasing Organizations

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