Healthcare Group Purchasing Industry Initiative

• What are healthcare group purchasing organizations (GPOs)?

Healthcare group purchasing organizations are business organizations that pool the purchasing volumes of member hospitals, health systems and other providers like nursing homes, home healthcare agencies, and physicians.  GPOs ensure acquisition of the best and most cost-effective products and services, and assist their members in improving quality of care for patients and efficiencies throughout the supply chain.

• What is the Initiative?

The Initiative is a voluntary association of healthcare group purchasing organizations (GPOs) created in 2005 to encourage and sustain best ethical and business conduct practices in teh GPO industry.

• Why was the Initiative created?

The Initiative was created to establish a process for the industry to monitor and improve its ethical and business conduct practices through significant transparency and to sustain a high level of trust with the public.

• How does the Initiative encourage best ethical and business conduct practices?

The Initiative requires each signatory company to pledge to follow six core ethical principles, to report annually on adherence to these principles using an Annual Accountability Questionnaire, and to participate in an Annual Best Practices Forum to discuss best ethical and business conduct practices with other GPO representatives and with representatives from government and other organizations.

• Who sponsors the Initiative?  How is it governed?

The Initiative is a stand-alone, single-purpose organization and is not affiliated with any other organization or industry association.  The Initiative is governed by a Steering Committee of the chief executive officers of participating organizations.  Its day-to-day affairs are guided by a Working Group of representatives of participating organizations and by an independent Coordinator, who services as executive officer of the Initiative.

• What companies belong to the Initiative?

The Initiative's founding members are Amerinet, Broadlane, Child Health Corporation of America, Consorta, GNYHA Ventures, Inc., HealthTrust Purchasing Group, MedAssets, Novation, and Premier, Inc.  These companies include most of the largest group purchasing organizations in the United States, estimated to represent more than 80 percent of the volume purchased through GPOs.  Other members are listed on the 'Members' page.

• Who may join the Initiative?

Any group purchasing organization, whether for profit or nonprofit, whether a stand-alone GPO or part of another organization, may join the Initiative.  Participating companies must pledge to follow the six core principles, report annually, participate in the Best Practices Forum, and contribute to the common expenses of the Initiative.  a general invitation for other GPOs to join was issued in late 2005.

• How will the Initiative help to elevate ethics and business conduct practices among GPOs?

The Initiative establishes six core principles of ethics and business conduct and then tracks how participating companies implement those principles.  Each participating company submits an Annual Accountability Questionnaire which addresses important areas of business practice and reports on its own policies and actions.  These company reports will be posted on the Initiative website and will be summarized in an Annual Public Accountability Report from the Initiative.  The disclosure of policies and practices that GPOs believe assure adherence to the Initiative's six core principles will permit government officials and members of the public to assess for themselves the adequacy of these policies and practices.  After the release of the Annual Public Accountability Report, all companies participate in a Best Practices Forum at which differing policies and practices are discussed with the participation of government officials and other guests.

Participating companies are expected to change their policies and practices as necessary in order to answer each of the questions in teh Annual Questionnaire in the affirmative and to provide adequate supporting documentation to permit the Initiative Coordinator to determine that each answer to the questionnaire is fairly given.  It is expected that participation in the Initiative will be a key criteria for hospitals and other providers when they select membership in a GPO.  The Steering Committee may suspend the participation of any GPO which fails to fulfill its obligations under the Initiative.

• When were the first reports from the Initiative released?

The first annual reports from participating companies were submitted in October 2005.  The first summary report on the practices of signatory companies was released in early 2006.

• When was the first Best Practices Forum held?

The first Best Practices Forum was held in early 2006.

• What are the major benefits of a voluntary Initiative like this?

Achieving exemplary ethics abd business practices across an industry is something that will occur if the leadership of the industry makes a significant commitment to achieve the articulated standards.  With this Initiative, each CEO is pledging that his or her organization will achieve the ethics and business conduct standards that are addressed in the core principles and the questionnaire, and will do so with extraordinary transparency.  Each participating GPO will do this because they have chosen to do it voluntarily.  This is the best way to achieve lasting change.

An additional regulatory solution is much less likely to be successful.  Faced with a complex regulatory scheme, companies inevitably turn primarily to lawyers to try to ensure that they are meeting the letter of the law.  Any aspiration to best practices tends to be extinguished by regulatory complexity and burden.

In addition, the healthcare GPO industry is diverse and, in recent years, has been extremely agile and dynamic in its efforts to serve the evolving needs of health care provides.  An attempt to regulate the industry would take several yearsr, and would be unlikely to keep up with the nature of the industry.  This voluntary system requires extensive, ongoing transparency and allows GPOs to respond most effectively to the evolving needs of the health care marketplace.  It can also achieve these goals at the lowest cost to hospitals and other providers and ultimately to patients and the funders of health care in the United States.

• How can I contact the Initiative?

Click here.