Group Purchasing Organizations

Group Purchasing
Organizations
Complex Trends in a
Changing Market
Healthcare Spending
Growth
2005 GPO Purchasing
Volume
The GPO Administrative
Fee
Purchasing Volume
Growth
Market Growth
GPO Market Share
GPO Shareback/Cash
Dividend to Members
Bed Counts and
Admissions
GPO Ownership
Structures
GPOs Now Serve Diverse
Provider Types
(Beyond Acute Care)
Non-Acute Care GPO Membership, 2004-2006*
2004 GPO
2006 GPO
Percentage
Provider Type
Memberships
Memberships Change
Long-Term Care Facilities 10,488
15,496
47.7%
Surgery Centers
3,564
6,168
73.1%
Radiology/Cancer
651
698
7.2%
Home Care
5,649
8,397
48.6%
Managed Care
471
1,073
127.8%
Laboratories
331
626
89.1%
Pharmacy and 340B
2,240
2,226
-0.6%
Ambulatory Care
51,652
63,219
22.4%
*M emberships with Amerinet, B roadlane, Co nso rta, M edAssets, No vatio n, Premier, and HPG
So urce: The M AX
Purchasing Nationally,
Organizing Locally
78.3% of purchasing relationships are with
national GPOs
83.7% of GPO organizations are national or
local in scope (e.g., are affiliates of
national organizations)
IDN Market Share (As
Percentage of Patient
Revenue)
Leading IDNs
in Largest MSAs
Rank
1
1
2
3
2
1
2
3
3
1
2
3
4
1
2
3
5
1
2
3
Leading IDNs by Market Share
Top Five Metropolitan Statistical Areas (MSAs) by Population
Local Inpatient Market
MSA/IDN
Share
Los Angeles-Long Beach, CA (population 9.14 million)
Los Angeles County Department of Health Services
13%
Kaiser Permanente
10%
USC Health Sciences
8%
New York, NY (population 8.57 million)
New York Presbyterian Healthcare System
24%
NYC Health & Hospitals Corporation
16%
Continuum Health Partners
9%
Chicago, IL (population 7.72 million)
Advocate Health Care
14%
Resurrection Health Care Corp
9%
Rush System for Health
5%
Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH (population 5.77 million)
Partners HealthCare System Inc
16%
South Shore Health & Educational Corp
10%
Caritas Christi Health Care System
10%
Philadelphia, PA-NJ (population 4.95 million)
Catholic Health East
22%
Fox Chase Network
16%
Jefferson Health System
16%
So urce: The M A X (www.uslifeline.co m); based o n 2000 US Census B ureau po pulatio n data
The state of healthcare
contracting-IDNs.
Total IDNs
System IV
140
Shareholders of
a GPO
88
System III
470
101
System II
685
60
System I
30
3
Which GPOs are capturing the LongTerm Care members?
Purchasing Entity
or GPO
Novation
Premier
MedAssets
Broadlane
HealthTrust
Amerinet
US DVA National
Acquisition Center
Consorta
MHA
US Military
HPPI
Innovatix
CHCA (Child Health
Corp of America)
MAGNET
AllHealth
HPS (Hospital
Purchasing Service)
Purchasing
Volume 2005
Alt Care & Other
Alt Care & Other
(billions) Membership 2005 Membership 2004 Variance
28
29,500
27,000
2,500
25
34,162
30,583
3,579
12
22,000
18,000
4,000
7
20,000
13,169
6,831
7
920
690
230
6
33,230
30,000
3,230
6
4
4
3
2
2
2
1
1
0
$111.07
1,038
1,950
5,994
513
7,810
7,500
1,000
1,171
5,500
500
7,000
6,000
38
779
494
13
810
1,500
16,500
1,315
16,369
1,209
0
131
106
2,484
1,175
1,309
Who are the growing GPOs? Which ones are
sliding
Purchasing
Entity or GPO
Novation
Premier
MedAssets
Broadlane
HealthTrust
Amerinet
US DVA
National
Acquisition
Center
Consorta
MHA
US Military
HPPI
Innovatix
CHCA (Child
Health Corp of
America)
MAGNET
AllHealth
HPS (Hospital
Purchasing
Service)
Purchasing Volume
2005 (billions)
$27.50
$25.00
$12.00
$7.40
$6.50
$6.40
Purchasing
Volume 2004
(billions
22.80
17.00
10.00
5.50
5.70
6.20
Purchasing
Volume 2003
(billions
20
16
7
5
5.3
6
Purchasing
Volume 2000
(billions
14
12
$6.00
$4.00
$4.00
$3.40
$2.40
$2.30
5.70
3.70
3.80
3.00
2.20
1.60
6
3
4
2.2
4
$1.80
$1.20
$0.67
1.60
1.00
0.66
$0.50
$111.07
0.48
$90.94
$72.30
$36.80
4.6
HIDA GPO Report sponsored by
The MAX
Average # of GPOs per hospital is 2.4
Average # of GPOs per IDN is 1.7
Estimated GPO compliance is 55%-60%
Future Trends of GPOs. Will they increase, maintain or
decrease in power as it relates to acute care /
alternate site contracting?
“The best way to drive down costs is for the
healthcare system to be truly committed to
compliance. When the level of commitment is
there, the vendors are willing to partner with
you and provide greater discounts.”
Joy Barnett
LSU Health Sciences Center
People are talking….
"... larger systems are centralizing both
procurement and requisition processing, as
well as accounts payable ... And as an
industry, we are headed toward greater
transparency and greater accountability."
Lou Fierens
Trinity Health
People are talking….
"GPOs will continue to survive ... many of the
distributors will offer similar services that
compete with GPOs ... so that in the future, it
may be a little bit harder to separate what’s a
GPO, what’s a distributor, a what’s a
consultant."
Jack Fleischer
New York-Presbyterian Hospital
People are talking….
"We will probably see IDNs band together, work
in small groups, and increase volume for
better pricing. They will do this with or without
GPOs."
George Hersch
Norton Healthcare
People are talking….
"We will see more centralized decision-making
in IDNs and the larger IDNs will do more of
their own contracting."
Brent Johnson
Intermountain Healthcare
People are talking….
"I believe we will see an increased trend among
healthcare organizations against inflationary
pressures by entering into longer-term
contracts. More five and seven-year term
agreements are likely."
Ed Robinson
Ohio Health
People are talking….
"I think there will be more pressure to show that
using a particular device produces better
patient outcomes."
Alan Wilde Jr. University Hospitals Health System
"... there will be a trend toward commoditization
of products, and outcomes will be tied to
products."
Dave Zimba West Penn Allegheny Health System
IDN trends. Do you see the IDNs continuing
to contract on their own? With or without the
GPO as a fallback?
GPOs are likely to grow without legislative
interference.
GPOs will continue with hybrid contracting models.
The consumer (IDN) is voting with its $$$ that GPOs
add value.
GPOs are becoming more valuable by contracting for
non-clinical items.