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Group purchasing saves big bucks. (Short Takes).

One way that hospitals and health systems are trying to keep costs down is through group purchasing organizations. A new study conducted for the Health Industry Group Purchasing Association found that group purchasing organizations (GPOs) saved hospitals between 10 and 15 percent ($12.8 to $19.2 billion) of the $128 billion in non-labor health care costs that were channeled through GPOs in 1999.

Non-labor purchases--such as pharmaceuticals, supplies, medical equipment and food--accounted for about 44.6 percent ($179 billion) of hospitals' total expenditures in 1999. Of this amount, approximately 72 percent ($128 billion) was purchased using group contracts. The study found that approximately one-third of the hospitals surveyed conduct purchasing over the Internet and about 5 percent of their purchases are made online. Hospitals spent an average of 12.5 percent ($21.9 billion) of all non-labor expenditures on pharmaceuticals in 1999.

James A. Hawkins is Publisher of Healthcare Briefings, a newsletter available in print, on cossette, via fax, and on computer disk He can be reached at 800/338-5486.
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Title Annotation:report by the Health Industry Group Purchasing Association
Author:Hawkins, James A.
Publication:Physician Executive
Article Type:Brief Article
Geographic Code:1USA
Date:May 1, 2000
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