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FOR IMMEDIATE RELEASE
Contact: David McDonough
Phone: 703-243-9262

WASHINGTON, D.C. (May 29, 2002) - In a letter to the U.S. General Accounting Office, Health Industry Group Purchasing Association (HIGPA) President & CEO Robert Betz, Ph.D., offered a detailed analysis of the GAO's pilot study on group purchasing organizations, including errors in the GAO's analysis and methodology, and provided the GAO with comments on elements that a more comprehensive study should include. Betz stated that HIGPA and its members looked forward to the opportunity to work with the GAO on future studies of group purchasing.

Betz said that "[t]he authors of the GAO study indicate it was intended to be 'exploratory' of the 'feasibility of collecting price and purchase data for medical devices…' Unfortunately, they used a very narrow and unrepresentative sampling of data to 'suggest' that group purchasing contracts 'do not always offer hospitals lower prices.'"

Betz said there were several limitations of the GAO pilot study, including:

• The scope of the study is very narrow.
• The selected product categories are unrepresentative.
• The study is not comprehensive, even with respect to a narrow sampling of products.
• The study does not capture all of the components of GPO value as price was inaccurately reported.
• Some of the study's conclusions are statistically insignificant.
• The study does not reflect hospitals' administrative and staff cost savings.
• The study ignores the key point that quality patient care drives GPO practices.
• The study failed to take volume into account.
• The study failed to demonstrate that hospitals purchased from large manufacturers because of GPOs.

Betz told the GAO that "[w]ith regard to any further GAO study, HIGPA and its individual members would eagerly work with the GAO in developing a comprehensive approach to studying actual cost savings and other benefits to hospitals and health care systems provided by GPOs…At your request, we would be pleased to arrange a meeting of GAO officials, HIGPA staff, and key GPO executives to review past analyses, their results, and the methodological issues we have identified in the course of this work."

"We are committed to cooperating with the GAO to ensure that any future study appropriately addressed the inherent limitations of the pilot study, and builds on the existing GPO knowledge base," Betz said.

Betz offered the GAO comments on elements that should be included in a more comprehensive study of group purchasing to ensure a complete, accurate and fair portrayal of GPO operations as they pertain to the health care system. These elements include:

• A valid product sample representative of the approximately 300,000 items purchased from hundreds of suppliers under hospital group contracts;
• A valid provider sample representative of the thousands of hospitals and other health care facilities of every size and type across the nation that engage in group purchasing;
• A methodology that accounts for all components of the value offered by GPOs;
• A measurement of the cost savings achieved through hospital group purchasing that reflects the consolidation of purchasing functions;
• An effort to quantify the effectiveness of GPOs' contribution to hospitals' delivery of high quality care or, at minimum, to qualify the scope and impact of GPOs' commitment to performance improvement; and,
• A determination of overall savings that extends beyond price to include rebates and value-added services.

To obtain copies of the letter to the GAO, please visit HIGPA's web site at http://www.higpa.org/pressroom/pressrm_index.asp.

HIGPA is a chartered trade association of over 165 health care purchasing and supply chain organizations that serve approximately three out of every four U.S. acute care hospitals, as well as most of the long term care, home care and medical group practice markets. HIGPA's Industry Members include purchasing groups, associations, multi-hospital systems, and health care provider alliances. HIGPA's Trading Partner members include many of the world's leading health care product manufacturers, distributors, wholesalers and related suppliers. According to a recent study conducted by a former principal analyst at the Congressional Budget Office, hospitals save patients approximately $20 billion each year by purchasing products through group contracts.

To learn more about HIGPA or the group purchasing industry, visit www.higpa.org or call 703-243-9262.

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