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Recent economic data indicates that government spending on health care as a share of the gross domestic product is 9 percent of the U.S. economy — up from 1 percent in 1950. The centerpiece of the health care overhaul — the state health insurance exchanges — is set to officially launch in less than nine months and is expected to increase access to health coverage for millions of people across the country and continue to boost job growth and spending in the health sector.
Despite the boom to the health care industry, hospitals, physician practices and nursing homes face continued regulatory uncertainty and Medicare payment if the sequester takes effect March 1. The importance for health care providers to focus on the bottom line has never been more acute.
Health care providers have relied on group purchasing organizations for more than a century to negotiate discounts with manufacturers, distributors and vendors — reducing costs in all areas of the health care supply chain. These days, GPOs have evolved beyond purveyors of goods to contracting for cafeteria services, custodial staff, back office, information technology, data and research support, and a host of technical services and infrastructure needs. It’s difficult to think of another industry where GPOs are more necessary.
As the supply chain industry grew and became more diverse, it attracted greater focus in Washington. Almost a decade ago, a small group of forward-thinking GPO executives saw an opportunity to establish an independent, voluntary organization that would promote the development and improvement of accountability standards, business practices and ethics to its customers, vendors and the public — in short, to create higher industry standards for quality and value.
The Healthcare Group Purchasing Industry Initiative was founded in 2005 as a nonprofit organization by the chief executives of those health care GPOs who thought their industry should do more collectively to demonstrate a strong commitment to ethical values. Today HGPII’s membership represents more than three-quarters of total GPO purchasing and is dedicated exclusively to the promotion of increased transparency and ethics in GPO business practices.
The mission of HGPII was founded on several core purposes, including a written code of business conduct. The HGPII model is based on a fair, open and competitive contracting process that is free of conflicts of interest and any undue influence. As a result, each GPO commits to having its business practices be transparent to its customers, vendors and the public. The members come together as part of an annual Best Practices Forum to discuss compliance programs and communicate with their stakeholders. Every year, the members submit answers to a lengthy survey known as the Public Accountability Questionnaire, which is then reviewed and evaluated by the independent coordinators.
For the past seven years, HGPII members have submitted to an annual, independent review of individual company business practices. In 2012, three former members of Congress with years of experience in the health care field took on the role of overseeing the HGPII review.
After a year of reviewing responses to hundreds of questions and conducting interviews and site visits, we are pleased to release the group’s seventh annual report to the public. Our review has determined that HGPII members have created internal business safeguards and enforcement mechanisms to prevent conflicts of interest; improved transparency in the bidding and awards process; and developed and implemented policies that facilitate and promote the availability of new, innovative technologies for health care. The annual report is available on the HGPII website.
In the years to come, the GPOs that make up HGPII have pledged to continue promoting best practices, while inspiring ethical conduct by both word and actions. Meeting these standards will require full transparency of business conduct practices with vendors and health care providers with whom they contract. In addition, the organization looks forward to improving its outreach to other GPOs, Congress, federal agencies, stakeholder groups and the public about the critical role GPOs play in the health care supply chain.
Former Rep. Phil English, R-Pa., and former Sens. Byron L. Dorgan, D-N.D., and Robert F. Bennett, R-Utah, are employed as national co-coordinators of the Healthcare Group Purchasing Industry Initiative.