Study suggests purchasing organizations could reduce health care costs
Supply chain costs play a key role in rising health care expenses. Nebraska researchers have found that group purchasing organizations can help hold the line.
“Hospitals use a plethora of critical supplies, such as syringes, radiology equipment, heart valves and coagulants, for daily operations,” said Alok Kumar, Steve and Jennifer David Chair in Business and professor of marketing. “Controlling the costs of supplies is critical to delivering cost-effective care, because other avenues to cut costs are quite limited. Doctors must be paid a competitive salary, for example.”
Managing supply chain costs often lies outside of hospitals’ primary expertise, but GPOs help health care providers realize savings by aggregating purchases and negotiating discounts with manufacturers and distributors.
Researchers examined how hospitals can leverage the interplay between GPOs and their suppliers to enhance the hospitals’ supply chain performance, which should lead to more effective and efficient patient care, Kumar said.
The study was published in the Journal of Marketing Research and originated partly from dissertation work at Nebraska by Jenifer Skiba, a 2016 alumna who now works at Missouri State University.
Controlling the costs of supplies is critical to delivering cost-effective care.
Alok Kumar
The team found that GPOs benefit health providers, but their effectiveness varies.
“GPOs can support hospitals’ supply chain outcomes by helping benchmark the supplier’s performance against the competition and fostering suppliers’ participation in the broader GPO community, composed of hospitals and suppliers,” said Amit Saini, chair of marketing and W.W. Marshall College Professor.
“However, these benefits vary by how dependent the hospital is on the supplier in question and how well the hospital can directly coordinate the supplier’s deliverables on its own.”
The findings also could have implications for other industries like manufacturing, retail and food production that rely on collective buying groups.
The study represents a major academic milestone.
“It is the first paper within marketing – and likely across disciplines – to comprehensively analyze the governance role of organizational collectivities like GPOs using empirical data,” Saini said.
Additional Content
From left: Amit Saini and Alok Kumar