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Hospital purchasing alliances: utilization, services, and performance.

Abstract：

BACKGROUND:Hospital purchasing alliances are voluntary consortia of hospitals that aggregate their contractual purchases of supplies from manufacturers. Purchasing groups thus represent pooling alliances rather than trading alliances (e.g., joint ventures). Pooling alliances have been discussed in the health care management literature for years but have never received much empirical investigation. They represent a potentially important source of economies of scale for hospitals. PURPOSES:This study represents the first national survey of hospital purchasing alliances. The survey analyzes alliance utilization, services, and performance from the perspective of the hospital executive in charge of materials management. This study extends research on pooling alliances, develops national benchmark statistics, and answers important issues raised recently about pooling alliances. METHODOLOGY/APPROACH:The investigators surveyed hospital members in the seven largest purchasing alliances (that account for 93% of all hospital purchases) and individual members of the Association of Healthcare Resource & Materials Management. The concatenated database yielded an approximate population of all hospital materials managers numbering 5,014. FINDINGS:Hospital purchasing group alliances succeed in reducing health care costs by lowering product prices, particularly for commodity and pharmaceutical items. Alliances also reduce transaction costs through commonly negotiated contracts and increase hospital revenues via rebates and dividends. Thus, alliances may achieve purchasing economies of scale. Hospitals report additional value as evidenced by their long tenure and the large share of purchases routed through the alliances. Alliances appear to be less successful, however, in providing other services of importance and value to hospitals and in mediating the purchase of expensive physician preference items. There is little evidence that alliances exclude new innovative firms from the marketplace or restrict hospital access to desired products. PRACTICE IMPLICATIONS:Pooling alliances appear successful in purchasing commodity and pharmaceutical products. Pooling alliances face the same issues as trading alliances in their efforts to work with physicians and the supply items they prefer.

journal_name

Health Care Manage Rev

journal_title

Health care management review

authors

Burns LR,Lee JA

doi

10.1097/01.HMR.0000324906.04025.33

subject

Has Abstract

pub_date

2008-07-01 00:00:00

pages

203-15

issue

eissn

0361-6274

issn

1550-5030

pii

00004010-200807000-00003

journal_volume

pub_type

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Hospital purchasing alliances: utilization, services, and performance.