The global pandemic shook the healthcare supply chain, demonstrating weaknesses and challenges modern providers and policymakers had not anticipated. Today, there are indications that the markets for essential healthcare supplies and equipment are evolving to incorporate the lessons of the past few years though many challenges remain, according to the annual report of the Healthcare Group Purchasing Industry Initiative (HGPII).
These are the findings in the 17th HGPII Annual Report, a longstanding industry standards and transparency project that has attracted the participation of leading healthcare group purchasing organizations (GPOs). We oversee this Initiative which annually measures and assesses the adherence of participating GPOs to a host of industry best practices and ethics compliance disciplines structured to promote a competitive functioning marketplace – one that benefits healthcare providers, suppliers and patients. HGPII embraces the understanding that a fair, transparent, and predictable supply chain is indispensable to the modern healthcare system.
GPO annual report key findings
The HGPII annual report reflects what has been called the most extensive ongoing best practices survey in the healthcare supply chain. Our report finds a marketplace that is making progress toward resiliency but continues to face potential disruptions and shortages. Read on for our report’s key findings.
Healthcare IT innovations are key to GPO efficiency. The GPO industry has developed sophisticated data analytics that are mitigating some of the risks to the healthcare supply chain, and individual GPOs are contributing their expertise in the supply chain to support practical improvements. These include an early warning system for GPO members that can improve the management of inventories and predict shortfalls. These information technology innovations are encouraging developments and suggest that improved resiliency could flow from ongoing partnerships with federal and state stakeholders.
GPO policies driving new products, technologies and services to the marketplace. Our report found that GPO policies are accommodating the introduction of new products, technologies and services to the medical marketplace, allowing those with genuine breakthroughs access to the market. This is essential for fostering improvements in health practices and outcomes.
Codes of conduct and internal controls for GPOs minimize conflicts of interest. Another issue is compliance with ethical norms. We have consistently found that the GPOs we survey maintain codes of conduct with internal controls that minimize conflicts of interest. All of them have dispute-resolution processes available to suppliers which appear to reduce conflicts over contract awards. While the sector uses contracting policies that leverage savings for the provider, we note that the results are competitive: the industry retains a balanced preference for multisource contracting that tolerates redundancy.
ESG policies critical to shaping the future of the healthcare supply chain. The HGPII survey also documents GPO practices that help shape the supply chain in important areas in the environmental, social and governance (ESG) arena. Most GPOs are continuing to develop supplier diversity programs that promote diverse ownership of vendors in the healthcare supply chain. These permit hospitals and other providers to use their buying power to promote equity and create opportunities in the marketplace. Many HGPII members have also developed systems to identify and promote environmentally preferred products that support healthy institutions and enhance ecosystems. These purchasing programs allow socially conscious healthcare institutions to advance community preferences.
HGPII report provides transparency, roadmap for avoiding future disruptions to supply chain
The HGPII process provides transparency to a part of the healthcare system frequently neglected by policymakers. Much of what our report covers is relevant to any strategic repositioning of the supply chain to avoid revisiting the extreme supply disruptions, shortages, grey market abuses and uncertainties of the last pandemic. Case studies included in the report document the efforts of individual members to foster a culture of ethical standards, and the training their practitioners receive as part of HGPII.
Our research concludes that the GPO sector remains highly competitive ̶ a necessary element in a healthcare system that aspires to provide both quality and cost savings.
We encourage healthcare professionals from every part of acute and long-term care systems to review our findings.
Former Senator Byron Dorgan and former Congressman Phil English are National Coordinators of the Healthcare Group Purchasing Industry Initiative and Senior Advisors at ArentFox Schiff LLP. Read their report here.