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April 2, 2020
David Burda
COVID-19 Economics Policy System Dynamics

Tone-Deaf GPOs Brag About Savings While Healthcare Workers Scramble for Supplies

Sometimes, it’s better just not to say anything.  

If you know anything about the COVID-19 outbreak in the U.S., you know that the healthcare supply chain here has been a complete disaster. Patients are dying because there’s a shortage of ventilators. Frontline doctors and nurses are dying because there’s a shortage of personal protective equipment. Supplies of drugs, devices and other things needed to care for patients and caregivers are dwindling.

Yet, in the middle of it all, on March 24, the Healthcare Supply Chain Association released its latest  annual report on the value that group purchasing organizations bring to the supply chain. The trade group that represents healthcare GPOs said its members save the healthcare industry $34.1 billion a year and is on pace to save the industry $456.6 billion over a 10-year period from 2017 through 2026.

With value like that, who need PPE? 

You can download the HSCA’s report here

If you know me or have read anything I’ve written about healthcare GPOs over the past 37 years, you know what I think about them. They’re basically skimming operations that enrich GPO executives and their health system sponsors and add, not reduce, costs to the healthcare system. What does it say about your business model if you need an exemption from federal kickback laws to operate?

That argument aside, healthcare GPOs don’t seem to be helping the situation right now if no one has enough of what they need to care for patients and stay alive while doing it. 

The Association for Professionals in Infection Control and Epidemiology polled its infection preventionist members from March 23 through March 25 on the availability of PPE and cleaning/disinfection supplies in their healthcare facilities to care for COVID-19 patients. Forty-three percent of the 1,141 infection preventionists who responded to the survey said they work in hospitals. 

Of those who responded:

  • 49 percent said they are out or nearly out of face shields
  • 48 percent said they are out or nearly out of respirators 
  • 31 percent said they are out or nearly out of face masks
  • 28 percent said they are out or nearly out of hand sanitizer

Now, this is pretty basic stuff, right? These aren’t physician preference items unless physicians prefer to wear the items to stay alive.

APIC released the results of its survey on March 27—three days after the HCSA touted how well its GPOs were doing. You can download the APIC survey results here.  

The breakdown of the healthcare supply chain hasn’t gone unnoticed by federal regulators. On March 23, U.S. Senators Chris Murphy (D-Conn.) and Brian Schatz (D-Hawaii) introduced the “Medical Supply Chain Emergency Act.” The proposed legislation would enable the government to take over and direct the manufacture of medical supplies and equipment during a public health crisis and take over and direct distribution of those supplies and equipment. The bill essentially would put GPOs on the bench.

You can read about the proposed legislation here

I’m not a big fan of government regulation, but that’s what happens when you don’t do your job. 

(If you want to learn more about that, please read “This Is a Story About Where Healthcare Regulations Come From on 4sighthealth.com.)

And if you’re not doing your job, at the very least, don’t send out a press release when everyone else is trying to do theirs.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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