Since the first group purchasing organization was established in 1910 by the Hospital Bureau of New York, GPOs have been pioneering healthcare cost reduction strategies for several decades. Finding power in numbers, GPOs leverage contracts based on members' purchasing ability to negotiate contracts and help providers save costs on purchased goods and services.
However, GPOs have played a controversial role in the healthcare industry. Although they can achieve savings for their member organizations, they often frustrate medical device companies who want to work directly with buyers. Additionally, several GPOs have been involved with lawsuits scrutinizing antitrust issues.
Regardless, GPOs remain a strong force in the healthcare industry.
According to Billian's HealthDATA, a research firm dedicated solely to healthcare, the following are the top 10 largest GPOs by total affiliate hospital beds as of 2013: MedAssets, Amerinet, Novation/Provista, Premier, MAGNET, HealthTrust, Managed Healthcare Associates, Hospital Central Services Cooperative, GNYHA Ventures and United States Department of Veterans Affairs.
Here are 50 things to know about some of the country's biggest GPOs.
GPO market
1. There are approximately 600 active GPOs serving healthcare providers across the country.
2. Between 96 percent and 98 percent of hospitals nationwide belong to at least one GPO, according to a Healthcare Supply Chain Association report.
3. Approximately 72 percent of hospital purchases are made through GPO contracts.
4. In a recent HSCA report, healthcare economists at Dobson DaVanzo & Associates found GPOs could help reduce overall healthcare spending by up to $864.4 billion by 2022, approximately $55 billion every year.
5. However, Congress has scrutinized GPO industry practices. In 2009, three senators sent letters to seven GPOs asking them for detailed information regarding business practices in attempts to clarify the "opaque and unfair" buying process, according to a New York Times report.
6. Additionally, controversy surrounds the contract administrative fees, which GPOs collect from vendors calculated by a percentage — typically between 1 and 3 percent, according to a Government Accountability Office report — of their negotiated contracts. Critics suggest GPOs favor larger vendors with more market share and higher pricing because the contract administrative fees, which GPOs use to cover operations, but also sometimes distribute back to hospital members.
MedAssets
7. As of 2013, Alpharetta, Ga.-based MedAssets was the largest GPO by number of affiliate beds, at 510,940.
8. John Bardis founded MedAssets in 1999, serving as chairman, president and CEO since its creation.
9. MedAssets serves 180 health systems, 4,200 hospitals and 122,000 non-acute healthcare providers.
10. MedAssets manages $365 billion in gross revenue on behalf of clients.
11. Two of MedAssets' major partnerships are with Oakland, Calif.-based Kaiser Permanente and Richmond University Medical Center in Staten Island, N.Y. Both partnerships were renewed this year.
Amerinet
12. St. Louis-based Amerinet was the second largest GPO by number of affiliate beds, totaling 389,551 beds.
13. Amerinet was established in 1986 and has since created four subsidiaries. Amerinet Choice is a product line, DataBay Resources is a healthcare market analysis system, Inquisit offers professional growth and development and Tempest Med offers solutions for the non-acute marketplace.
14. In an interview with Becker's Hospital Review, Amerinet president and CEO Todd Ebert says while GPOs are serving their healthcare organizations, organization leaders hold the responsibility to challenge their GPOs to help hold them accountable for delivering best strategies.
15. In July already, Amerinet inked four new deals for its member organizations with Gensco Laboratories, Symmetry Surgical, Partners4Health and ETEX Corp.
Novation
16. Irving, Texas-based Novation's affiliate bed sum was 293,611, as of 2013.
17. Novation serves as a contracting company for four healthcare alliances, VHA, UHC, Children's Hospital Association and Provista. These four organizations include more than 100,000 members.
18. Novation reports supplying more than $49 billion in contracts with more than 600 suppliers and distributors for its healthcare alliances in 2013.
19. The Ethisphere Institute named Novation one of the World's Most Ethical Companies in 2014 for the third year in a row.
20. Jody Hatcher has served as president and CEO of Novation since 2008.
Premier
21. Charlotte, N.C.-based Premier works with approximately 3,000 hospitals nationwide and 110,000 other providers.
22. Premier's affiliate bed sum totaled 290,627 as of 2013.
23. Premier's clinical database offers information on one-third of discharges nationwide, as well as approximately 2.5 million real-time clinical transactions every day and $41 billion in annual purchasing data.
24. Ethisphere Institute also named Premier a "World's Most Ethical Company" for the past seven years, identifying the GPO for best practices in corporate ethics and governance.
25. Susan DeVore is currently president and CEO of Premier, a position she assumed in 2009.
26. Premier developed a smartphone app allowing member organizations and suppliers to view product pricing on purchasing contracts.
27. Premier has also been vocal about current CMS payment reform proposals and submitted comments on the FY 2015 Inpatient Prospective Payment System rule. While Premier agrees with a number of CMS' proposed rules, such as phasing in documentation and coding adjustments, the GPO urged CMS to delay enforcing the "two-midnight policy," adjust certain readmission penalties and suspend implementing mandatory electronic reporting.
28. Premier recently expanded its revolving credit facility, now providing up to $750 million of borrowing ability, with a maximum increase of an aggregate $250 million, subject to lender approval.
MAGNET
29. Mechanicsburg, Pa.-based MAGNET's 2013 affiliate bed sum totaled 211,823.
30. MAGNET, or Mid-Atlantic Group Network of Shared Services, was founded in 1979.
31. MAGNET serves nearly 9,500 providers from acute-care, long-term care facilities, physicians practices, residential living centers and other affiliated providers.
32. The GPO serves five member organizations with which it consults and confers: Dayton-based Southwest Ohio Health Care Affiliates, Wallingford-based Connecticut Hospital Association Shared Services Program, Allentown, Pa.-based Hospital Central Services Cooperative, New York City-based Joint Purchasing Corporation and Kearny, Neb.-based PHYND Technologies.
33. Christopher Moore serves as president and chairman of MAGNET.
HealthTrust
34. Brentwood, Tenn.-based HealthTrust Purchasing Group serves nearly 1,400 acute-care hospitals, including HCA, HMA, Community Health Systems and Lifepoint.
35. By Billians HealthDATA estimates, HealthTrust's affiliate bed sum total in 2013 was 189,488.
36. HealthTrust was one of the founding members of the Healthcare Group Purchasing Industry Initiative in 2005, an industry organization dedicated to the best ethical and business practices.
37. Through its Supplier Diversity program, HealthTrust makes a point to consider small businesses owned by minorities, women or service disabled veterans as suppliers of contracted products and services. In 2012, this program provided more than 92 contracts and $168 million in volume.
38. President and CEO Ed Jones has been leading the company since 2012.
MHA
39. Florham Park, N.J.-based Managed Health Care Associates had 144,528 affiliated beds as of 2013.
40. MHA offers 26 "classes of trade" — an organization classification based on the nature of business — including long-term care, physician clinics and home medical order.
41. Founded in 1989, MHA originally focused on long-term care pharmacies and alternate sites.
42. Now, the GPO serves more than 15,000 care sites and processes more than one third of long-term care pharmacy Medicare part D reimbursement claims.
43. In 2013, MHA announced the formation of the MHA ACO Network, allowing ACOs to partner with MHA's network suppliers and distributors and provide a single contracting point for both ACO and post-acute care providers.
44. Michael Sicilian has served as president of MHA since 2007, prior to which he was executive vice president of the alternate care site division since 2005.
HCSC
45. Based in Allentown, Pa., Hospital Central Services was founded in 1968, and its group purchasing services were initiated in 1969.
46. HCSC's total affiliate bed count as of 2013 was 58,524.
47. Peter Castagna Jr. was named president and CEO of HCSC in May 2013.
GNYHA Ventures
48. Greater New York Hospital Association Ventures' total affiliate bed count as of 2013 was 56,803.
49. Based in New York City, GNYHA Ventures is the for-profit branch of the Greater New York Hospital Association, the largest business enterprise of a trade association in the U.S., according to the company. GNYHA Ventures' business entities include 11 companies serving more than 30,000 customers.
50. Lee Perlman serves as GNYHA Ventures' president. He also serves as the public policy chair for the HSCA.
Note: This article was updated on July 22 to clarify MedAssets' reach in managing clients' gross revenue.
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