Hospital purchasing alliances: Ten years after.

BACKGROUND: Most hospitals outsource supply procurement to purchasing alliances, or group purchasing organizations (GPOs). Despite their early 20th century origin, we lack both national and trend data on alliance utilization, services, and performance. The topic is important as alliances help hospitals control costs, enjoy tailwinds from affiliated regional/local alliances, and face headwinds from hospital self-contracting and criticism of certain business practices. PURPOSE: We compare the utilization, services, and performance of alliances in 2004 and 2014. APPROACH: We analyze alliances using two comparable surveys of hospitals. We use significance tests to assess changes in alliance utilization, services, and performance (e.g., cost savings). We also assess the use of regional/local alliances affiliated with national GPOs. RESULTS: Purchasing through national alliances has somewhat diminished. Over 10 years, hospitals have diversified GPO memberships to include regional/local alliances (many affiliated with their national GPO) and engaged in self-contracting. At the same time, hospitals have increased purchases of many categories of supplies/services through national GPOs and endorsed their value-added functions and increasingly important role. Hospitals report greater satisfaction with several GPO functions; performance on most dimensions has not changed. CONCLUSIONS: National alliances still play important roles that hospitals find valuable. PRACTICE IMPLICATIONS: Purchasing alliances continue to play an important role in helping hospitals with both cost savings and new services. Their growing complexity, along with growing use of self-contracting, poses managerial challenges for hospital purchasing staff that may require greater hospital investment.

Observations on the Medicare Value-Based Ranking of Hospitals During Fiscal Years 2015 and 2016.

Medicare's Value-Based Purchasing Program (VBPP) compensates hospitals based on value of care provided. VBPP's total performance score (TPS) components data were evaluated by hospital groups: physician-owned surgical hospitals (POSH), Kaiser Hospitals, University HealthSystem Consortium Hospitals, Pioneer Accountable Care Organization Hospitals, US News and World Report Honor Roll Hospitals, and other hospitals. Multilevel random coefficient models estimated mean and significance of TPS differences from fiscal year (FY) 2015 and FY 2016, by hospital type. Overall mean TPS for 2985 hospitals decreased from 41.65 to 40.25. POSH and Kaiser Hospitals had significantly higher TPS in FY 2015 and FY 2016. POSH Patient Experience Domain scores exceeded all other Patient Experience Domain scores. The Efficiency Domain scores of Kaiser greatly exceeded the scores of all groups. Results suggest that POSH and Kaiser Hospitals provide significantly greater value of care with consistency from year to year when compared with other groups studied.

Strategies for Promoting the Medical Device Industry in Korea: An Analytical Hierarchy Process Analysis.

This study examines the medical device industry in the context of the Fourth Industrial Revolution and identifies the key strategies and general directions for promoting this industry through analytical hierarchy process (AHP). It is based on discussions of the key issues with specialists such as doctors, medical device companies, hospital staff, professors, and government agencies in the medical device industry. A total of 18 responses were obtained from the survey, and an analysis was conducted on the results. Among the medical device strategies identified by the surveyed specialists, clarifying the application of regulations (access strategy), increasing R&D investment for the technological development of medical devices (expansion strategy), and increasing support for global market expansion (infrastructure expansion strategy) were found to have the highest priority. Based on the above, we suggest key strategies and directions for promoting the medical device industry.

Association Between Medicare's Mandatory Hospital Value-Based Purchasing Program and Cost Inefficiency.

BACKGROUND: The Patient Protection and Affordable Care Act instituted pay-for-performance programs, including Hospital Value-Based Purchasing (HVBP), designed to encourage hospital quality and efficiency. OBJECTIVE AND METHOD: While these programs have been evaluated with respect to their implications for care quality and financial viability, this is the first study to assess the relationship between hospitals' cost inefficiency and their participation in the programs. We estimate a translog specification of a stochastic cost frontier with controls for participation in the HVBP program and clinical and outcome quality for California hospitals for 2012-2015. RESULTS: The program-participation indicators' parameters imply that participants were more cost inefficient than their peers. Further, the estimated coefficients for summary process of care quality indexes for three health conditions (acute myocardial infarction, pneumonia, and heart failure) suggest that higher quality scores are associated with increased operating costs. CONCLUSION: The estimated coefficients for the outcome quality variables suggest that future determination of HVBP payment adjustments, which will depend solely on mortality rates as measures of clinical care quality, may not only be aligned with increasing healthcare quality but also reducing healthcare costs.

Quantifying opportunities for hospital cost control: medical device purchasing and patient discharge planning.

OBJECTIVES: To quantify the potential reduction in hospital costs from adoption of best local practices in supply chain management and discharge planning. STUDY DESIGN: We performed multivariate statistical analyses of the association between total variable cost per procedure and medical device price and length of stay, controlling for patient and hospital characteristics. METHODS: Ten hospitals in 1 major metropolitan area supplied patient-level administrative data on 9778 patients undergoing joint replacement, spine fusion, or cardiac rhythm management (CRM) procedures in 2008 and 2010. The impact on each hospital of matching lowest local market device prices and lowest patient length of stay (LOS) was calculated using multivariate regression analysis controlling for patient demographics, diagnoses, comorbidities, and implications. RESULTS: Average variable costs ranged from $11,315 for joint replacement to $16,087 for CRM and $18,413 for spine fusion. Implantable medical devices accounted for a large share of each procedure's variable costs: 44% for joint replacement, 39% for spine fusion, and 59% for CRM. Device prices and patient length-of-stay exhibited wide variation across hospitals. Total potential hospital cost savings from achieving best local practices in device prices and patient length of stay are 14.5% for joint replacement, 18.8% for spine fusion;,and 29.1% for CRM. CONCLUSIONS: Hospitals have opportunities for cost reduction from adoption of best local practices in supply chain management and discharge planning.

Centralized contracting an imperative for reducing health system costs.

As a health system expands, there is a concomitant need for its leaders to take steps to ensure that redundancies in purchasing processes do not drive up costs to unsustainable levels. Spectrum Health in Grand Rapids, Mich., tackled this challenge by instituting a revenue-driven, patient-care-focused value analysis process that centralized contracting processes in several areas of nonsalary expense. Spectrum went on to uncover opportunities for cutting costs in its decentralized, non-purchase order expenses, saving 24 percent in the first of four arenas.

Strategies to identify future shortages due to interruptions in the health care procurement supply chain and their impact on health services: a method from the English National Health Service.

OBJECTIVES: The uninterrupted supply of essential items for patient care is crucial for organizations that deliver health care. Many products central to health care are derived from natural resources such as oil and cotton, supplies of which are vulnerable to climate change and increasing global demand. The purpose of this study was to identify which items would have the greatest effect on service delivery and patient outcomes should they no longer be available. METHODS: Using a consensus development approach, all items bought by one hospital, over one year, were subjected to a filtering process. Criteria were developed to identify at-risk products and assess them against specific risks and opportunities. Seventy-two items were identified for assessment against a range of potential impacts on service delivery and patient outcomes, from no impact to significant impact. Clinical and non-clinical participants rated the items. RESULTS: In the category of significant impact, consensus was achieved for 20 items out of 72. There were differences of opinion between clinical and non-clinical participants in terms of significant impact in relation to 18 items, suggesting that priority over purchasing decisions may create areas of conflict. Reducing reliance on critically scarce resources and reducing demand were seen as the most important criteria in developing sustainable procurement. CONCLUSION: The method was successful in identifying items vulnerable to supply chain interruption and should be repeated in other areas to test its ability to adapt to local priorities, and to assess how it functions in a variety of public and private settings.

Use of clinical simulation for assessment in EHR-procurement: design of method.

In Denmark, two large regions cooperate in a public intervention process of acquiring a new eHealth-platform to support the daily clinical work of approximately 40,000 users in 14 hospitals. It is essential that the new platform, besides fulfilling comprehensive detailed specifications, supports the daily work practice consisting of numerous mixed tasks executed by many different clinical actors in various settings. Within health informatics it has proven beneficial to use human factors approaches in the design process to secure systems that are responsive to the actual field of application. While design methods are widely described, there are very limited descriptions of how to assess and compare different EHR-platforms and their support in work processes upon its procurement. This paper describes the method we have developed to undertake this task. It is discussed how the method differs and how it has been adjusted from existing assessment methods. Finally, future considerations are discussed.

Constrained procurement across Europe.

Most of us are aware that the financial climate across Europe at the moment is inevitably going to impact upon our way of working. This is particularly so in the area of procurement. Our surgeon 'gods' can no longer demand whatever they wish, and we as the new generation of 'Florences' cannot rub our lamps and produce the genies with their endless pots of gold.