DQ 5-2

DQ 5-2 responses

1.

I do feel as though hospitals who engage in purchasing organizations are engaging In price fixing. I believe this because GPO’s are entities that provide assistance to healthcare providers—such as hospitals, nursing homes, surgery centers and clinics  and home health agencies—realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors and other vendors. Therefore, price-fixing isn’t present between group purchasing organizations and most hospitals or any facility if it’s kind. I’m sure that there are loopholes that can be found in any situation that could be ultimately use to fix pricing through group organizations. GPOs do not buy or purchase products; rather, they work to negotiate contracts for purchases that participating providers can benefit from. Depending on purchasing volume, GPOs can save practices a substantial sum of money. ​The activities of group organizations can very well and easily slip into fixed-pricing because of the negotiations on the actual pricing (HSCA, 2019). But how are the GPI’s saving the hospitals money? Is it by locking them into a price on items that is only negotiable between the hospitals them? I do believe that this can be called fixed-pricing, just like we have fixed rates that usually stems from negotiations.

However, just like with any purchase information must be gathered and analyzed in order to determine the next best course of action to be taken pertaining to a purchase. 

AAP.org. (2019). Group Purchasing Organizations. [online] Available at: https://www.aap.org/en-us/professional-resources/practice-transformation/managing-practice/Pages/group-purchasing-organizations.aspx [Accessed 18 Apr. 2019].

HSCA. (2019). FAQ. [online] Available at: https://www.supplychainassociation.org/about-us/faq/ [Accessed 18 Apr. 2019].

2.

According to the Federal Trade Commission, Group purchasing organizations (GPOs) are corporations responsible for negotiating drug, device, and other medical products and service prices on behalf of healthcare providers, hospitals, ambulatory care facilities, physician practices, nursing homes, and home health agencies (O’Brien, Leibowitz & Anello, n.d.) and their main purpose is to improve the quality of healthcare services while lowering members operating costs by reducing transaction costs and negotiating lower prices. After their analysis the FCT has determined that GPO’s save money for healthcare providers, patients, and taxpayers. They negotiate (not collude) contracts between supply and service vendors and healthcare providers and hospitals creating value by lowering negotiating transaction costs and negotiate lower prices. Negotiations happen regardless if a hospital uses a GPO or negotiate with vendors on their own, but by using one and creating a savings they can in turn pass the savings on to their patients. Price fixing is when two or more competitors conspire on a fixed price to be charged for services or goods which can control the competition (Pozgar & Santucci, 2016).

O’Brien, D., Leibowitz, J., & Anello, R. GROUP PURCHASING ORGANIZATIONS: How GPOs Reduce Healthcare Costs and Why Changing Their Funding Mechanism Would Raise Costs A Legal and Economic Analysis. Retrieved from https://www.ftc.gov/system/files/documents/public_comments/2017/12/00222-142618.pdf

Pozgar, G.D. & Santucci, N.M. (2016). Legal Aspects of Health Care Administration (12th ed.). Burlington, MA: Jones & Bartlett Learning.

3.

As a procurement/purchasing specialist, my answer is yes. Group purchasing organization job is to help health care facility to save money on virtually everything they buy. When establish purchasing contracts with the best vendors in your supply chain to buy your essential goods and services with optimal purchasing power. Negotiation take place in other to extract lower prices from suppliers.

A group purchasing organization (GPO) is an entity that helps health care providers — such as hospitals, nursing homes and home health agencies — realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors and other vendors.

Health care organizations in particular benefit from this type of collective thanks to “safe harbor” laws. Anti-fraud laws passed in the 1970 to protect patients from price gouging and other deceptive practices imperiled the ability of GPOs to reduce health care costs while preserving standards of patient care (Biedron, 2018 ).

My job as a procurement/purchasing specialist is to negotiation lower better price. To find a price-fix in order to continue to provide better services to the customers, which in this case is all health care facilities. GPO reduces cost primarily though two mechanisms, which are by lower transaction costs and lower prices through joint negotiation. However this doesn't mean that just because they are negotiating, they are not agreeing to a fix-price.

Reference

Biedron, R. (2018 , December 14). Benefits of a Group Purchasing Organization. Retrieved from Purchasing Control: https://www.purchasecontrol.com/blog/group-purchasing-organization/