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GROUP PURCHASING ORGANIZATIONS - Protecting …

GROUP PURCHASING ORGANIZATIONS : How GPOs Reduce Healthcare Costs and Why Changing Their Funding Mechanism Would Raise Costs A Legal and Economic Analysis Dan O Brien, Jon Leibowitz, and Russell Anello Table of Contents I. Executive summary ..3 II. Introduction ..5 The GPO Safe GPOs reduce healthcare costs ..6 Competitiveness of the GPO Effects of vendor funding of The neutrality principle ..7 Transaction costs ..7 Addressing concerns about vendor funding ..7 Summary ..10 III. Federal policy toward GPO funding ..11 IV. GPOs reduce healthcare Evidence of healthcare cost reductions ..13 Transaction cost Sources of transaction cost How transaction cost savings reduce healthcare costs.

the GPO industry’s efficient, cost-reducing pricing institutions to arise. The economic analysis in this paper supports this reasoning and explains why altering the funding mechanism would be inefficient. The GPO Statutory Clarification, 42 U.S.C. § 1320a-7b(b)(3)(C),has also been referred to as a “safe harbor” provision or as

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