Supply Chain Sausage

“The simple idea that greater purchasing volume lowers producers’ per-unit costs thereby permitting price discounting is the foundation of employer health care group purchasing organizations…. You would think that would mean hospitals would contract with specialized group purchasing organizations (GPOs), pay their annual membership fees and obtain savings from the GPOs’ negotiated volume discounts on drugs and supplies for inpatients. But … it doesn’t seem to work that way at all … an] hospital GPO practices may be a root cause for the increasing cost our plans pay for the drugs that are administered to inpatients as well as the chronic shortages of inpatient drugs.” (Chelko Consulting Group)