Prospects for development of group purchasing organizations (GPOs) in China within the context of national centralized drug procurement.

Healthcare group purchasing organizations (GPOs) are considered to play an integral role in the healthcare supply chain by keeping prices low and helping all members of the healthcare system achieve their objectives. China has been exploring GPOs in the field of drug procurement since 2015, and there are currently three GPO models in Shanghai, Shenzhen, and Guangzhou. Although the three models operate differently and they have each been examined, they have all achieved certain results and demonstrated the ability to control drug expenditures. In 2018, the National Healthcare Security Administration implemented a national centralized drug procurement policy, also known as the 4 + 7 procurement policy ("4+7 Policy"). This policy context has also led to changes in the strategy for development of GPOs in China. GPOs need to explore strategies that do not overlap with the scope of 4 + 7 procurement, and they need to develop dynamic and personalized procurement plans that are more in line with first-line clinical practices to have a synergistic effect in combination with the "4+7 Policy." In the future, GPOs will grow rapidly in China. The number of GPOs need to be increased to prevent monopolies, and GPOs need to expand their diversified value-added services to perform more tasks in terms of supply chain management and data analysis.

Hospital purchasing alliances: Ten years after.

BACKGROUND: Most hospitals outsource supply procurement to purchasing alliances, or group purchasing organizations (GPOs). Despite their early 20th century origin, we lack both national and trend data on alliance utilization, services, and performance. The topic is important as alliances help hospitals control costs, enjoy tailwinds from affiliated regional/local alliances, and face headwinds from hospital self-contracting and criticism of certain business practices. PURPOSE: We compare the utilization, services, and performance of alliances in 2004 and 2014. APPROACH: We analyze alliances using two comparable surveys of hospitals. We use significance tests to assess changes in alliance utilization, services, and performance (e.g., cost savings). We also assess the use of regional/local alliances affiliated with national GPOs. RESULTS: Purchasing through national alliances has somewhat diminished. Over 10 years, hospitals have diversified GPO memberships to include regional/local alliances (many affiliated with their national GPO) and engaged in self-contracting. At the same time, hospitals have increased purchases of many categories of supplies/services through national GPOs and endorsed their value-added functions and increasingly important role. Hospitals report greater satisfaction with several GPO functions; performance on most dimensions has not changed. CONCLUSIONS: National alliances still play important roles that hospitals find valuable. PRACTICE IMPLICATIONS: Purchasing alliances continue to play an important role in helping hospitals with both cost savings and new services. Their growing complexity, along with growing use of self-contracting, poses managerial challenges for hospital purchasing staff that may require greater hospital investment.

Evaluating the centralized purchasing policy for the treatment of hepatitis C: The Colombian CASE.

The high cost of drugs for hepatitis C limits access and adherence to treatment. In 2017, the Colombian health care system decided to design a strategy. It consisted of centralized purchasing, regulations, clinical practice guidelines, and direct observation of the treatment and follow-up of patients. The main objective of this study was to assess the centralized purchasing strategy in Colombia. The study design was a policy implementation assessment. We analyzed the change in prices, the clinical outcomes, and the opinions of stakeholders using data from the Ministry of Health. Additional information about effectiveness came from the Colombian Fund for High-Cost Diseases and semi-structured interviews of the stakeholders. The follow-up was from October, 2017 to October, 2018. The total number of patients reported in the cohort period was 1069. The number that finished 12 weeks of treatment, completed the follow-up for the case closure, and were considered cured through the end of October, 2018 was 563 (53%). The remainder, 506 patients (47%), are currently in treatment. A total of 543 of these treated patients (96%) were cured. After implementing this strategy, the drug prices decreased by more than 90% overall. Before implementation, the total direct cost was $100 102 171.75 dollars. Afterward, the cost was $8 378 747 dollars.

Dependence and power in healthcare equipment supply chains.

Most healthcare organizations (HCOs) engage Group Purchasing Organizations (GPOs) as an outsourcing strategy to secure their supplies and materials. When an HCO outsources the procurement function to a GPO, this GPO will directly interact with the HCO's supplier on the HCO's behalf. This study investigates how an HCO's dependence on a GPO affects supply chain relationships and power in the healthcare medical equipment supply chain. Hypotheses are tested through factor analysis and structural equation modeling, using primary survey data from HCO procurement managers. An HCO's dependence on a GPO is found to be positively associated with a GPO's reliance on mediated power, but, surprisingly, negatively associated with a GPO's mediated power. Furthermore, analysis indicates that an HCO's dependence on a GPO is positively associated with an HCO's dependence on a GPO-contracted Original Equipment Manufacturer (OEM). HCO reliance on GPOs may lead to a buyer's dependence trap, where HCOs are increasingly dependent on GPOs and OEMs. Implications for HCO procurement managers and recommended steps for mitigation are offered. Power-dependence relationships in the medical equipment supply chain are not consistent with relationships in other, more traditional, supply chains. While dependence in a supply chain relationship typically leads to an increase in reliance on mediated power, GPO-dependent HCOs instead perceive a decrease in GPO mediated power. Furthermore, HCOs that rely on procurement service from GPOs are increasingly dependent on the OEMs.

[Financial allocations in the System for Social Protection in Health in Mexico: challenges for strategic purchasing]. / Asignación financiera en el Sistema de Protección Social en Salud de México: retos para la compra estratégica.

OBJECTIVE:: The financial coordination of the System of Social Protection in Health (SPSS) was analyzed to assess its support to strategic purchasing. MATERIALS AND METHODS:: Official reports and surveys were analyzed. RESULTS:: SPSS covers a capita of 2 765 Mexican pesos, equivalent to 0.9% of GDP. The Ministry of Health contributed 35% of the total, state governments 16.7% and beneficiaries 0.06%. The National Commission for Social Protection in Health received 48.3% of resources, allocating 38% to State Social Protection Schemes in Health and paying 7.4% of the total directly to providers.The state contribution is in deficit while family contributions tend not to be charged. CONCLUSION:: SPSS has not built funds specialized in strategic purchasing, capable of transforming historical budgets.The autonomy of providers is key to reduce out-of-pocket spending through the supply of quality services.

Asignación financiera en el Sistema de Protección Social en Salud de México: retos para la compra estratégica / Financial allocations in the System for Social Protection in Health in Mexico: challenges for strategic purchasing

Resumen: Objetivo: Analizar la coordinación financiera del Sistema de Protección Social en Salud (SPSS) y su capacidad para apoyar la compra estratégica de servicios. Material y métodos: Se analizaron informes oficiales y encuestas. Resultados: El SPSS cubre una cápita por afiliado de 2 765 pesos mexicanos, equivalente a 0.9% del PIB para 2013. La Secretaría de Salud asignó 35% del total; los gobiernos estatales 16.7%, y los beneficiarios 0.06%. La Comisión Nacional de Protección Social en Salud recibió 48.3% de estos recursos, de los cuales asignó 38% a los estados y pagó directamente a prestadores 7.4% del total. El aporte estatal está en déficit mientras que las contribuciones familiares tienden a no cobrarse. Conclusión: El SPSS no ha integrado fondos especializados en la compra estratégica capaz de transformar los presupuestos históricos. La autonomía de los prestadores es clave para que puedan contribuir a reducir el gasto de bolsillo mediante la oferta de servicios de calidad.

Abstract: Objective: The financial coordination of the System of Social Protection in Health (SPSS) was analyzed to assess its support to strategic purchasing. Materials and methods: Official reports and surveys were analyzed. Results: SPSS covers a capita of 2 765 Mexican pesos, equivalent to 0.9% of GDP. The Ministry of Health contributed 35% of the total, state governments 16.7% and beneficiaries 0.06%. The National Commission for Social Protection in Health received 48.3% of resources, allocating 38% to State Social Protection Schemes in Health and paying 7.4% of the total directly to providers.The state contribution is in deficit while family contributions tend not to be charged. Conclusion: SPSS has not built funds specialized in strategic purchasing, capable of transforming historical budgets.The autonomy of providers is key to reduce out-of-pocket spending through the supply of quality services.

Seeking lower prices where providers are consolidated: an examination of market and policy strategies.

The ongoing consolidation between and among hospitals and physicians tends to raise prices for health care services, which poses increasing challenges for private purchasers and payers. This article examines strategies that these purchasers and payers can pursue to combat provider leverage to increase prices. It also examines opportunities for governments to either support or constrain these strategies. In response to higher prices, payers are developing new approaches to benefit and network design, some of which may be effective in moderating prices and, in some cases, volume. These approaches interact with public policy because regulation can either facilitate or constrain them. Federal and state governments also have opportunities to limit consolidation's effect on prices by developing antitrust policies that better address current market environments and by fostering the development of physician organizations that can increase competition and contract with payers under shared-savings approaches. The success of these private- and public-sector initiatives likely will determine whether governments shift from supporting competition to directly regulating payment rates.

The effects of rebate contracts on the health care system.

Group purchasing organizations gain increasing importance with respect to the supply of pharmaceutical products and frequently use multiple, exclusive or partially exclusive rebate contracts to exercise market power. Based on a Hotelling model of horizontal and vertical product differentiation, we examine the controversy around whether a superior rebate scheme exists, as far as consumer surplus, firms' profits and total welfare are concerned. We find that firms clearly prefer partially exclusive over multiple, and multiple over exclusive rebate contracts. In contrast, no rebate form exists that lowers total costs per se for the consumers or maximizes total welfare.

A hybrid approach for integrated healthcare cooperative purchasing and supply chain configuration.

This paper presents an innovative and flexible approach for recommending the number, size and composition of purchasing groups, for a set of hospitals willing to cooperate, while minimising their shared supply chain costs. This approach makes the financial impact of the various cooperation alternatives transparent to the group and the individual participants, opening way to a negotiation process concerning the allocation of the cooperation costs and gains. The approach was developed around a hybrid Variable Neighbourhood Search (VNS)/Tabu Search metaheuristic, resulting in a flexible tool that can be applied to purchasing groups with different characteristics, namely different operative and market circumstances, and to supply chains with different topologies and atypical cost characteristics. Preliminary computational results show the potential of the approach in solving a broad range of problems.

Shared ownership: what's the future?

The status of library consortia has evolved over time in terms of their composition and alternative negotiating models. New purchasing models may allow improved library involvement in the acquisitions process and improved methods for meeting users' future needs. Ever-increasing costs of library resources and the need to reduce expenses make it necessary to continue the exploration of library consortia for group purchases.