Facing the prospect of congressional scrutiny of the fundamental way they do business, the healthcare group purchasing industry, in a pre-emptive strike, has released its own study of the clinical review processes in place to ensure that the smartest and most cost-effective clinical supplies are making their way to hospital shelves.
Not surprisingly, the study concludes that purchasers are doing a good and just job, although not every GPO and health system evaluates products in quite the same way.
The beleaguered industry's trade group, the Health Industry Group Purchasing Association, commissioned the Lewin Group, Falls Church, Va., to conduct the study, which was based on telephone interviews with five anonymous health systems of varying size and geographic locations and six major GPOs during February and March.
The Lewin Group has conducted numerous studies in recent years for various healthcare organizations, including the American Hospital Association. These studies have often been used to advance the client's political positions or counter criticism.
The GPO study's release last week was timely. GPOs have come under increasing fire from device manufacturers, which charge that the GPO contracting process poses unfair financial barriers to the emergence of new and improved technologies, and the Senate Judiciary antitrust subcommittee is planning to hold a hearing tentatively scheduled for the end of the month. Sources said GPOs are preparing to answer some tough questions that could go to the heart of their existence: a revenue model that is highly dependent on vendor fees.
In addition, industry insiders widely acknowledge that the General Accounting Office has been investigating this somewhat stealthy industry-stealthy at least to consumers. The GAO may issue a report of some kind in conjunction with the subcommittee hearings.
"The timing couldn't be any better, but frankly we view it as something we've had in the works over a year now," said Robert Betz, the HIGPA's president and chief executive officer. "We believe it is going to be helpful, not only on Capitol Hill, but other places as well. It was all driven by the realization that the group purchasing industry needed to demonstrate evidence of the detailed ways that the industry evaluates products, and it enhances what we in the industry have known for years. Like a lot of organizations, we have assumed that people understood a lot more about us than they do."
Betz declined to disclose what the HIGPA paid for the study, saying only that it was "very, very expensive."
Although they are structured in a variety of ways, purchasing groups in general are the unique healthcare organizations that marshal the collective buying power of their provider members to broker discounted deals with manufacturers and distributors. As payment, the purchasing groups earn administrative fees from the vendors, some of which are passed on to the members. Critics charge that financial, not clinical, considerations too often drive the process. The study aims to dissipate that criticism.
The Lewin Group's specific charge was to determine whether the clinical review processes support nimble adoption and cost-effective use of healthcare technology. The authors concluded that although the processes vary a great deal, all the processes "employ widely accepted methods for assessing the clinical value of healthcare technologies." Sometimes more is done at the health system level and other times more is done at the GPO level, they said.
If any generalities can be drawn, it's that there is "a stronger tendency to see clinical review done at larger, academically based institutions," said Robert Atlas, who heads the Lewin Group as its executive vice president and chief operating officer. Smaller hospitals and health systems are more likely to rely on information from the GPOs. The health systems that participated in the study were not identified because they were not "invested in the process," as were the GPOs who commissioned the study, Atlas noted.
"We felt from what we heard reported that the clinical review process was not unduly biased by financial considerations," said Beth Winter, a senior consultant for the Lewin Group.
Atlas said that besides the depth of the review processes in place by health systems and GPOs alike, he also was struck by "the fluid interaction" between health systems and GPOs in reviewing products.
"In particular, GPOs draw from health systems that are their constituents in a dynamic way to make these reviews happen," Atlas said.
GPOs surveyed for the study were AmeriNet, Consorta Catholic Resource Partners, Magnet, Novation, Premier and Shared Services Healthcare. Between them, Novation and Premier have a lock on two-thirds of the hospital purchasing market, according to Modern Healthcare's surveys of the industry.