In the US, over 95 percent of hospitals use Group Purchasing Organizations (GPOs), or pooling alliances, to purchase medications, devices, and supplies. GPOs can reduce administrative burdens while lowering negotiated prices. However, more research is needed to understand whether GPOs reduce competition, for example by steering affiliated hospital’s product choices to more dominant manufacturers.
In a study in Health Affairs Scholar, Dr. Amelia Bond, assistant professor of population health sciences, and colleagues use mixed quantitative and qualitative methods to determine how GPOs influence hospital purchasing behavior and product choice. The study also explores GPO contracting mechanisms.
To best determine how GPOs may steer toward a given product, researchers focused on purchasing behaviors for biosimilars. Biosimilars are medically equivalent but nonidentical substitutes for physician-administered biologic medicines. This product choice is usually less costly than the original biologic but offers the same clinical benefit.
Researchers found that hospitals affiliated with the two largest GPOs, HealthTrust and Vizient, had higher biosimilar uptake relative to other GPOs and that these GPOs had the most aggressive contracting practices. This suggests that aggressive contracting practices, such as selective or percentage-based contracting, have increased the growth of biosimilar products, which are generally more cost-efficient. However, additional research, which may be impeded by lack of data transparency, is needed to evaluate the long-term impact of selective contracting across a range of settings.
- Highlights