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.

Dependence and power in healthcare equipment supply chains.

Most healthcare organizations (HCOs) engage Group Purchasing Organizations (GPOs) as an outsourcing strategy to secure their supplies and materials. When an HCO outsources the procurement function to a GPO, this GPO will directly interact with the HCO's supplier on the HCO's behalf. This study investigates how an HCO's dependence on a GPO affects supply chain relationships and power in the healthcare medical equipment supply chain. Hypotheses are tested through factor analysis and structural equation modeling, using primary survey data from HCO procurement managers. An HCO's dependence on a GPO is found to be positively associated with a GPO's reliance on mediated power, but, surprisingly, negatively associated with a GPO's mediated power. Furthermore, analysis indicates that an HCO's dependence on a GPO is positively associated with an HCO's dependence on a GPO-contracted Original Equipment Manufacturer (OEM). HCO reliance on GPOs may lead to a buyer's dependence trap, where HCOs are increasingly dependent on GPOs and OEMs. Implications for HCO procurement managers and recommended steps for mitigation are offered. Power-dependence relationships in the medical equipment supply chain are not consistent with relationships in other, more traditional, supply chains. While dependence in a supply chain relationship typically leads to an increase in reliance on mediated power, GPO-dependent HCOs instead perceive a decrease in GPO mediated power. Furthermore, HCOs that rely on procurement service from GPOs are increasingly dependent on the OEMs.

Contracting out to improve the use of clinical health services and health outcomes in low- and middle-income countries.

BACKGROUND: Contracting out of governmental health services is a financing strategy that governs the way in which public sector funds are used to have services delivered by non-governmental health service providers (NGPs). It represents a contract between the government and an NGP, detailing the mechanisms and conditions by which the latter should provide health care on behalf of the government. Contracting out is intended to improve the delivery and use of healthcare services. This Review updates a Cochrane Review first published in 2009. OBJECTIVES: To assess effects of contracting out governmental clinical health services to non-governmental service provider/s, on (i) utilisation of clinical health services; (ii) improvement in population health outcomes; (iii) improvement in equity of utilisation of these services; (iv) costs and cost-effectiveness of delivering the services; and (v) improvement in health systems performance. SEARCH METHODS: We searched CENTRAL, MEDLINE, Embase, NHS Economic Evaluation Database, EconLit, ProQuest, and Global Health on 07 April 2017, along with two trials registers - ClinicalTrials.gov and the International Clinical Trials Registry Platform - on 17 November 2017. SELECTION CRITERIA: Individually randomised and cluster-randomised trials, controlled before-after studies, interrupted time series, and repeated measures studies, comparing government-delivered clinical health services versus those contracted out to NGPs, or comparing different models of non-governmental-delivered clinical health services. DATA COLLECTION AND ANALYSIS: Two authors independently screened all records, extracted data from the included studies and assessed the risk of bias. We calculated the net effect for all outcomes. A positive value favours the intervention whilst a negative value favours the control. Effect estimates are presented with 95% confidence intervals. We used the Grading of Recommendations Assessment, Development and Evaluation (GRADE) approach to assess the certainty of the evidence and we prepared a Summary of Findings table. MAIN RESULTS: We included two studies, a cluster-randomised trial conducted in Cambodia, and a controlled before-after study conducted in Guatemala. Both studies reported that contracting out over 12 months probably makes little or no difference in (i) immunisation uptake of children 12 to 24 months old (moderate-certainty evidence), (ii) the number of women who had more than two antenatal care visits (moderate-certainty evidence), and (iii) female use of contraceptives (moderate-certainty evidence).The Cambodia trial reported that contracting out may make little or no difference in the mortality over 12 months of children younger than one year of age (net effect = -4.3%, intervention effect P = 0.36, clustered standard error (SE) = 3.0%; low-certainty evidence), nor to the incidence of childhood diarrhoea (net effect = -16.2%, intervention effect P = 0.07, clustered SE = 19.0%; low-certainty evidence). The Cambodia study found that contracting out probably reduces individual out-of-pocket spending over 12 months on curative care (net effect = $ -19.25 (2003 USD), intervention effect P = 0.01, clustered SE = $ 5.12; moderate-certainty evidence). The included studies did not report equity in the use of clinical health services and in adverse effects. AUTHORS' CONCLUSIONS: This update confirms the findings of the original review. Contracting out probably reduces individual out-of-pocket spending on curative care (moderate-certainty evidence), but probably makes little or no difference in other health utilisation or service delivery outcomes (moderate- to low-certainty evidence). Therefore, contracting out programmes may be no better or worse than government-provided services, although additional rigorously designed studies may change this result. The literature provides many examples of contracting out programmes, which implies that this is a feasible response when governments fail to provide good clinical health care. Future contracting out programmes should be framed within a rigorous study design to allow valid and reliable measures of their effects. Such studies should include qualitative research that assesses the views of programme implementers and beneficiaries, and records implementation mechanisms. This approach may reveal enablers for, and barriers to, successful implementation of such programmes.

Outsourcing within the Nordic context: Care services for older people in Finland.

The early 1990s economic setback brought significant reforms favoring the outsourcing of care in Finnish municipalities. Here, outsourcing refers to the practice of municipalities employing private organizations through different means (e.g., open tendering) to deliver public care services. In this context, this study examines the growth in the outsourcing of service housing and home-help services in 311 municipalities from 2001 to 2015 and investigates the municipal factors associated with outsourcing using four dimensions: care needs, population size, economic situation, and political ideology of the municipality. The findings reveal a steep increase in the outsourcing of home-help and service housing. Care needs of older people are the most influential factor for outsourcing, particularly for service housing. Overall, the findings show a growing trend in private care provision in Finnish municipalities.

OUTSOURCING ETHICAL DILEMMAS: REGULATING INTERNATIONAL SURROGACY ARRANGEMENTS.

This article argues that the English legislative regime is ineffective in regulating international surrogacy, particularly with regard to commercial payments. It suggests that if English law views surrogacy as exploitative, we have a responsibility to protect women both in England and abroad, and the only way to do so effectively is to create a domestic system of regulation that caters adequately for the demand in this country. This requires a system of authorisation for surrogacy before it is undertaken; ex-post facto examinations of agreements completed in other jurisdictions, after the child is already living with the commissioning parents, cannot be seen as an acceptable compromise, as authorisation will inevitably be granted in the child's best interests.

Comparison of extracorporeal shock wave lithotripsy running models between outsourcing cooperation and rental cooperation conducted in Taiwan.

BACKGROUND/PURPOSE: We conducted a retrospective study to compare the cost and effectiveness between two different running models for extracorporeal shock wave lithotripsy (SWL), including the outsourcing cooperation model (OC) and the rental cooperation model (RC). METHODS: Between January 1999 and December 2005, we implemented OC for the SWL, and from January 2006 to October 2011, RC was utilized. With OC, the cooperative company provided a machine and shared a variable payment with the hospital, according to treatment sessions. With RC, the cooperative company provided a machine and received a fixed rent from the hospital. We calculated the cost of each treatment session, and evaluated the break-even point to estimate the lowest number of treatment sessions to make the balance between revenue and cost every month. Effectiveness parameters, including the stone-free rate, the retreatment rate, the rate of additional procedures and complications, were evaluated. RESULTS: Compared with OC there were significantly less treatment sessions for RC every month (42.6±7.8 vs. 36.8±6.5, p=0.01). The cost of each treatment session was significantly higher for OC than for RC (751.6±20.0 USD vs. 684.7±16.7 USD, p=0.01). The break-even point for the hospital was 27.5 treatment sessions/month for OC, when the hospital obtained 40% of the payment, and it could be reduced if the hospital got a greater percentage. The break-even point for the hospital was 27.3 treatment sessions/month for RC. No significant differences were noticed for the stone-free rate, the retreatment rate, the rate of additional procedures and complications. CONCLUSION: Our study revealed that RC had a lower cost for every treatment session, and fewer treatment sessions of SWL/month than OC. The study might provide a managerial implication for healthcare organization managers, when they face a situation of high price equipment investment.

Standards, Regulation and Registration of Dental Laboratories. An Industry Update.

State dental associations are showing increased interest in maintaining current standards and regulations affecting the dental laboratory industry as mandated by the Food and Drug Administration. The domestic dental laboratory industry is being significantly stressed by foreign competition, rapid technology development and unprecedented consolidation, which are changing the way that prosthetic devices and restorations are manufactured and delivered to dentists. Of paramount importance to the prescribing dentist is the accurate documentation of the source and materials being used in prostheses being delivered to patients.

Whacked by RAC.

Some health care leaders describe the Medicare Recovery Audit Contractors program as "insane" in its current form and complain that it imposes a crushing burden on hospitals, even though most claims denials are overturned on appeal. Can RAC be fixed?

Should you outsource your hospital's security services? Some things to consider.

The author, who has managed both in-house and contracted security services, states unequivocally that hospitals can save money by hiring a security company, but cautions that there may be other considerations involved. In this article he provides guidance on making valid and meaningful comparisons between the two options.

The effect of service outsourcing on labor income share: Measuring labor income share from the global value chains perspective.

Inspired by the positive impact of service outsourcing in Chery and other enterprises on human resources, this paper explores the impact of service outsourcing on labor income share. This paper introduces a framework to analyze how value added is distributed between capital and labor along the mix of inputs from different countries and sectors participating in global value chains and examines the effect of service outsourcing on the labor share income. Using the World Input-Output Database (WIOD) and OECD Inter-Country Input-Output (OECD- ICIO) table, this paper utilizes the WWZ decomposition method of global value chains (GVCs) to quantify labor share income. The results show that: (1) service outsourcing significantly contributes to the increase in labor share income; (2) Offshore outsourcing had a statistically stronger effect on labor share income after the financial crisis, both compared to the past and to onshore outsourcing; (3) Offshore outsourcing has a higher coefficient in countries with low technology. For ease of comparison, only onshore outsourcing shows a statistically significant difference among various service types; (4) The analysis using Chinese data reveals that the coefficient of offshore outsourcing is negative and statistically significant, indicating that industries with higher levels of service outsourcing have a lower labor share income.

Rumble over jailhouse healthcare. As states broaden outsourcing to private vendors, critics question quality of care and cost savings.

The trend for states to outsource prison healthcare has met opposition from inmate advocates and legal aid groups. They fear quality of care will suffer, while others debate whether outsourcing care saves any money. Corizon, the largest U.S. private prison healthcare provider, says it definitely delivers savings. "We are the model because we've been doing capitated rates since we've been in business. Our cost per individual is significantly less than in the 'free world,' "says Corizon CEO Rich Hallworth.

Create a translational medicine knowledge repository--research downsizing, mergers and increased outsourcing have reduced the depth of in-house translational medicine expertise and institutional memory at many pharmaceutical and biotech companies: how will they avoid relearning old lessons?

Pharmaceutical industry consolidation and overall research downsizing threatens the ability of companies to benefit from their previous investments in translational research as key leaders with the most knowledge of the successful use of biomarkers and translational pharmacology models are laid off or accept their severance packages. Two recently published books may help to preserve this type of knowledge but much of this type of information is not in the public domain. Here we propose the creation of a translational medicine knowledge repository where companies can submit their translational research data and access similar data from other companies in a precompetitive environment. This searchable repository would become an invaluable resource for translational scientists and drug developers that could speed and reduce the cost of new drug development.

Effects of outsourcing magnetic resonance examinations from a public university hospital to a private agent.

BACKGROUND: Sometimes the measures taken to make a radiology department more effective, such as prioritizing the workload and keeping equipment running for as many hours as staffing permits, are not enough. In such cases, outsourcing radiological examinations is a potential solution for reducing waiting times. PURPOSE: To investigate differences in waiting time, quality and costs between magnetic resonance (MR) examinations performed in a university hospital and examinations outsourced to private service. MATERIAL AND METHODS: We retrospectively selected a group of consecutive, outsourced MR examinations (n=97) and a control group of in-house MR examinations, matched for type of examination. In each group there were referrals that had a specified preferred timeframe for completion. We measured the percentage of cases in which this timeframe was met and if it was not met, how many days exceeded the preferred time. In referrals without a specified preferred timeframe, we also calculated the waiting time. Quality standards were measured by the percentage of examinations that had to be re-done and re-assessed. Finally, we calculated the cumulative costs, taking into account the costs for re-doing and re-assessing examinations. RESULTS: There was no statistically significant difference between the groups, in either the number of examinations that were not performed within the preferred time or the number of days that exceeded the preferred timeframe. For referrals without a preferred timeframe, the waiting time was shorter for outsourced examinations than those not outsourced. There were no differences in the number of examinations that had to be re-done, but more examinations needed to be re-assessed in the outsourced group than in the in-house group. The calculated costs for outsourced examinations were lower than the costs for internally performed examinations. CONCLUSION: Outsourcing magnetic resonance examinations may be an effective way of reducing a radiology department's workload. Ways in which to reduce the additional costs incurred for re-assessment of outsourced examinations must be investigated further.