Healthcare Controversy: Group Purchasing Organizations Encounter Troubled Waters in the ‘Safe Harbor’

from knowledge.wpcarey.asu.edu

Six years after conflict-of-interest allegations prompted ongoing reforms among group purchasing organizations (GPOs) in the healthcare industry, Congress still hasn’t closed a controversial loophole, critics say.

At issue is a regulation that creates a “safe harbor” from antitrust laws permitting what would otherwise be considered illegal kickbacks between suppliers and buyers. The “kickback” occurs during this scenario: Hospitals join the GPOs, which negotiate group contracts with manufacturers for supplies ranging from syringes to operating tables. The manufacturers pay “administrative fees” to the GPOs — the very organizations responsible for evaluating and selecting products from competing manufacturers.

A kickback, or a discount rewarding the efficiency of group contracting?

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