	Background

Hospitals’ budgets for medical devices and other goods are substantial. 1.) However, GPOs assert  that this selective contracting is part of a competitive process allowing the  GPO to negotiate lower prices. Use of GPO Contract Often Did Not Yield Price Savings for Hospitals Buying Pacemakers and Safety Needles

Purchasing with GPO contracts did not ensure that hospitals saved money. 2.) Small and Medium-Sized Hospitals More Likely Than Large Hospitals to Realize Price Savings on Pacemakers with GPO Contract

We examined how hospitals of different sizes using GPOs fared relative to  their peers purchasing pacemakers on their own and found that whether  there were savings depended on the size of the hospital. Concluding Observations

While this is a pilot study based on one market, the data raise questions  about one of the intended benefits from having large GPOs. In fact, there were several instances in which individual  hospitals using a large GPO’s contracts paid prices that were at least 25  percent higher than prices negotiated by hospitals on their own, and  smaller GPOs also sometimes offered better prices.
Why GAO Did This Study

This testimony discusses group purchasing organizations (GPO) for medical devices and supplies used in hospitals. By pooling the purchases of their member hospitals, these specialized firms negotiate lower prices from vendors.

What GAO Found

GAO found that a hospital's use of a GPO contract did not guarantee that the hospital saved money: GPOs' prices were not always lower and were often higher than prices paid by hospitals negotiating directly with vendors. GAO studied price savings with respect to: (1) whether hospitals using GPO contracts received better prices than hospitals that did their own contracting, (2) the size of the hospital, and (3) size of the GPO. This data raises questions about whether GPOs, specially large GPOs, achieve consistent price savings.