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.

Quality check: does it matter for quality how you organize and pay for health care? A review of the international evidence.

Health systems in high-income countries have experienced significant organizational and financial reforms over the last 25 years. The implications of these changes for the effectiveness of health care systems need to be examined, particularly in relation to their effects on the quality of health services (a pertinent issue in the United Kingdom in light of the Francis Report). Systematic review methodology was used to locate and evaluate published systematic reviews of quantitative intervention studies (experimental and observational) on the effects of health system organizational and financial reforms (system financing, funding allocations, direct purchasing arrangements, organization of service provision, and service integration) on quality of care in high-income countries. Nineteen systematic reviews were identified. The evidence on the payment of providers and purchaser-provider splits was inconclusive. In contrast, there is some evidence that greater integration of services can benefit patients. There were no relevant studies located relating to funding allocation reforms or direct purchasing arrangements. The systematic review-level evidence base suggests that the privatization and marketization of health care systems does not improve quality, with most financial and organizational reforms having either inconclusive or negative effects.

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.

Variation in provider vaccine purchase prices and payer reimbursement.

OBJECTIVE: The purpose of this work was to collect data regarding vaccine prices and reimbursements in private practices. Amid reports of physicians losing money on vaccines, there are limited supporting data to show how much private practices are paying for vaccines and how much they are being reimbursed by third-party payers. METHODS: We conducted a cross-sectional survey of a convenience sample of private practices in 5 states (California, Georgia, Michigan, New York, and Texas) that purchase vaccines for administration to privately insured children/adolescents. Main outcome measures included prices paid to purchase vaccines recommended for children and adolescents and reimbursement from the 3 most common, non-Medicaid payers for vaccine purchase and administration. RESULTS: Detailed price and reimbursement data were provided by 76 practices. There was a considerable difference between the maximum and minimum prices paid by practices, ranging from $4 to more than $30 for specific vaccines. There was also significant variation in insurance reimbursement for vaccine purchase, with maximum and minimum reimbursements for a single vaccine differing from $8 to more than $80. Mean net yield per dose (reimbursement for vaccine purchase minus price paid per dose) varied across vaccines from a low of approximately $3 to more than $24. Reimbursement for the first dose of vaccine administered ranged from $0 to more than $26, with a mean of $16.62. CONCLUSIONS: There is a wide range of prices paid by practices for the same vaccine product and in the reimbursement for vaccines and administration fees by payers. This variation highlights the need for individual practices to understand their own costs and reimbursements and to seek opportunities to reduce costs and increase reimbursements.

E-procurement in the Brazilian healthcare system: the impact of joint drug purchases by a hospital network / Proceso de compras en línea en el sistema de salud brasileño: impacto de la adquisición conjunta de medicamentos por una red hospitalaria

OBJECTIVE: To evaluate the use of e-procurement to obtain supplies for a network of seven university hospitals with a joint purchase system. METHODS: The study was carried out between October 2003 and October 2005. We analyzed nine joint purchases of 37 pharmaceutical items. All the items were purchased in at least two-thirds of the nine occasions and/or were among the 10 items with the highest expenditure. The following aspects were recorded: price, number of suppliers providing quotes, type of supplier (distributor or manufacturer), reference value (lowest price paid per item by each hospital prior to the establishment of the joint purchase system), unit price for first purchase, and unit price for last purchase. The percent variation in price was compared in relation to the reference value, first and last purchases, and average unit price for the nine purchases. RESULTS: A decrease in price > 10 percent was observed in 47 percent of the medications analyzed. A decrease > 20 percent was recorded in 32 percent of the 37 items. Five items (midazolam 5 mg 3 mL, tramadol 100 mg 2 mL, vancocin 500 mg vial, ceftazidime 1 g vial and cefepime 1 g vial) had a decrease > 50 percent in unit cost in the first purchase compared to the last purchase value. The unit price for 26 items (70 percent) had an average reduction of 23 percent. CONCLUSIONS: E-procurement was successful in achieving real savings. The results show that the incorporation of new management technologies such as e-procurement in the healthcare setting may help overcome the management gap in the healthcare sector.

OBJETIVO: Evaluar la utilización de un proceso de compras en línea para obtener suministros para una red de siete hospitales universitarios con un sistema conjunto de adquisición. MÉTODOS: Este estudio se realizó entre octubre de 2003 y octubre de 2005. Se analizaron nueve adquisiciones conjuntas de 37 productos farmacéuticos. Todos los productos se adquirieron al menos en seis de las nueve ocasiones o estaban entre los 10 productos de mayor desembolso. Se recogieron los siguientes datos: precio, número de proveedores que cotizaron productos, tipo de proveedor (distribuidor o productor), valor de referencia (menor precio pagado por producto por cada hospital antes de establecer el sistema conjunto de adquisición) y precio unitario en la primera adquisición y en la última. Se calculó la variación porcentual del precio con respecto al valor de referencia y los precios unitarios, tanto de la primera adquisición y la última como del promedio de las nueve adquisiciones. RESULTADOS: El precio decreció más de 10 por ciento en 47 por ciento de los medicamentos analizados. En 32 por ciento de los 37 productos, el precio se redujo en más de 20 por ciento. En cinco productos (midazolam 5 mg, 3 mL; tramadol 100 mg, 2 mL; vancocina 500 mg, vial; ceftazidime 1 g, vial; y cefepime 1 g, vial), el costo unitario de la primera adquisición se redujo en 50 por ciento o más en comparación con el de la última adquisición. El precio unitario de 26 (70 por ciento) de los productos se redujo 23 por ciento en promedio. CONCLUSIONES: Con el sistema de aprovisionamiento en línea se lograron ahorros concretos. Estos resultados demuestran que la incorporación de nuevas tecnologías de administración en instalaciones de salud, como los sistemas de aprovisionamiento en línea, puede contribuir a reducir las deficiencias administrativas en el sector salud.

E-procurement in the Brazilian healthcare system: the impact of joint drug purchases by a hospital network.

OBJECTIVE: To evaluate the use of e-procurement to obtain supplies for a network of seven university hospitals with a joint purchase system. METHODS: The study was carried out between October 2003 and October 2005. We analyzed nine joint purchases of 37 pharmaceutical items. All the items were purchased in at least two-thirds of the nine occasions and/or were among the 10 items with the highest expenditure. The following aspects were recorded: price, number of suppliers providing quotes, type of supplier (distributor or manufacturer), reference value (lowest price paid per item by each hospital prior to the establishment of the joint purchase system), unit price for first purchase, and unit price for last purchase. The percent variation in price was compared in relation to the reference value, first and last purchases, and average unit price for the nine purchases. RESULTS: A decrease in price > 10% was observed in 47% of the medications analyzed. A decrease > 20% was recorded in 32% of the 37 items. Five items (midazolam 5 mg 3 mL, tramadol 100 mg 2 mL, vancocin 500 mg vial, ceftazidime 1 g vial and cefepime 1 g vial) had a decrease >or= 50% in unit cost in the first purchase compared to the last purchase value. The unit price for 26 items (70%) had an average reduction of 23%. CONCLUSIONS: E-procurement was successful in achieving real savings. The results show that the incorporation of new management technologies such as e-procurement in the healthcare setting may help overcome the management gap in the healthcare sector.

Hospital purchasing alliances: utilization, services, and performance.

BACKGROUND: Hospital purchasing alliances are voluntary consortia of hospitals that aggregate their contractual purchases of supplies from manufacturers. Purchasing groups thus represent pooling alliances rather than trading alliances (e.g., joint ventures). Pooling alliances have been discussed in the health care management literature for years but have never received much empirical investigation. They represent a potentially important source of economies of scale for hospitals. PURPOSES: This study represents the first national survey of hospital purchasing alliances. The survey analyzes alliance utilization, services, and performance from the perspective of the hospital executive in charge of materials management. This study extends research on pooling alliances, develops national benchmark statistics, and answers important issues raised recently about pooling alliances. METHODOLOGY/APPROACH: The investigators surveyed hospital members in the seven largest purchasing alliances (that account for 93% of all hospital purchases) and individual members of the Association of Healthcare Resource & Materials Management. The concatenated database yielded an approximate population of all hospital materials managers numbering 5,014. FINDINGS: Hospital purchasing group alliances succeed in reducing health care costs by lowering product prices, particularly for commodity and pharmaceutical items. Alliances also reduce transaction costs through commonly negotiated contracts and increase hospital revenues via rebates and dividends. Thus, alliances may achieve purchasing economies of scale. Hospitals report additional value as evidenced by their long tenure and the large share of purchases routed through the alliances. Alliances appear to be less successful, however, in providing other services of importance and value to hospitals and in mediating the purchase of expensive physician preference items. There is little evidence that alliances exclude new innovative firms from the marketplace or restrict hospital access to desired products. PRACTICE IMPLICATIONS: Pooling alliances appear successful in purchasing commodity and pharmaceutical products. Pooling alliances face the same issues as trading alliances in their efforts to work with physicians and the supply items they prefer.

Look what I found! Poison hunting on eBay.

BACKGROUND: Many substances deemed too dangerous for commercial use are still available to the general public. The purchase of these substances may potentially place members of the general public at risk for serious poisonings. This study was designed to document the large variety of dangerous poisons readily available on a popular online auction Web site. Methods. Over a 10-month period, the online auction Web site eBays was searched daily using the terms "poison" and "contents." Product name, active ingredients, what form the product is in, amount in container, and relative toxicity rating (Clinical Toxicology of Commercial Products, Gosselin, et al.) were recorded. If available, pictures of the products were saved. RESULTS: One hundred twenty-one individual products were identified. Fifty-five were in solid/tablet form, 37 were powders, and 29 were liquids. Product containers were full for 56 items and partially full for 65. Twenty-four products contained ingredients rated as "supertoxic" and included strychnine (10), arsenic trioxide (8), cyanide (2) and nicotine, pilocarpine, phosphorus, powdered conium maculatum (1 each). Sixty-three products contained "extremely toxic" ingredients including thallium, picrotoxin, soluble barium, antimony, mercury, arsenates, podophyllin, fluoride, zinc phosphide, atropine, scopolamine, and plant extracts of gelsemium, aconite, larkspur, and croton. Twenty-one products contained "very toxic" ingredients including lead, copper, camphor, caffeine, theobromine, creosote, pyrogallic acid, sparteine, quinine, lindane, warfarin, phenol, and digitalis. The remaining 13 were "moderately-slightly toxic." CONCLUSION: While the viability of the labeled ingredients could not be verified, the transportation, handling, and potential utilization of these dangerous poisons by the general public could result in serious poisonings.