GPOs anticipate, await Congressional oversight agenda

 

Will the new Congress revisit voluntary efforts on business ethics?

by Rick Dana Barlow 

When Congress reconvenes this month a new person – expected to be a familiar face – assumes the chairmanship of the Senate Judiciary Committee’s Antitrust Subcommittee, which has established its claim as the legislative watchdog over the healthcare group purchasing industry.

With the political changing of the guard where Democrats assume control of both chambers of Congress, the healthcare industry may anticipate policy changes in a number of key areas, ranging from consumer-directed healthcare (including health savings accounts and pricing transparency) to stem cell research to Medicare reimbursement to specialty surgical hospitals, recently rechristened by their association as physician hospitals.

Buried deep within that mix, however, is oversight of group purchasing organization activities. Sen. Mike DeWine (R-OH) was defeated in his re-election bid, vacating his Senate seat, as well as his chairmanship of the Senate Judiciary Committee’s Antitrust Subcommittee, which has been investigating GPO conduct for several years. DeWine seemed to grasp the basics of GPO operations, and seemed more receptive to the GPO industry’s arguments.

His likely successor as head of the subcommittee, however, is Sen. Herb Kohl (D-WI), who served as DeWine’s political counterpart and ranking member. Unlike DeWine, Kohl seemed unimpressed with GPO efforts toward self-regulation, favoring federal legislation as the sure-fire solution to enforce ethical behavior among GPOs.

If the GPOs are the least bit concerned about Congressional attitudes changing for the worse toward GPOs this year they aren’t showing it. Nor are the proponents of Kohl’s more directive efforts clapping their hands.

Several of the leading GPOs deferred to the Health Industry Group Purchasing Association, the industry trade group reinvigorated to the lead the charge up Capitol Hill on behalf of the near-century-old, multibillion-dollar service industry.

“HIGPA does anticipate a great deal of change when the 110^th Congress convenes in January,” Curtis Rooney, HIGPA’s new president, told Healthcare Purchasing News last month. “We expect a new emphasis on the issues of cost, quality and access in the healthcare system. HIGPA is in the process of strengthening its focus on advocacy and looks forward to working with the new Congress and staff including the Antitrust Subcommittee when they return. We think GPOs have a great story to tell in terms of cost savings and quality improvement and are excited to have the opportunity to let the new Congress know about our success.”

Armed with its receipt of the 2006 Malcolm Baldrige National Quality Award, Premier Inc. was more than willing to weigh in, despite the controversy surrounding the honor, which is given by a government agency representing the executive branch. Premier has been one of two leading GPOs singled out by the subcommittee for anticompetitive practices.

“The bottom line is that we’ve not heard anything specific,” said Blair Childs, senior vice president of public affairs at Premier. “However, any oversight committee is going to continue to say that they have oversight jurisdiction over this process. We need to be cognizant of that mentality and should never feel we’re operating outside of that oversight. We don’t think the election will change that.”

But Childs promoted Premier’s work with and support of the Healthcare Group Purchasing Industry Initiative, which was designed to promote business ethics, as well as cost containment and quality patient care. “I think there is a growing awareness of the effectiveness of our work with the Initiative,” he said. “There is a real sense that this is a very strong initiative and is representing the industry well. It’s addressing issues that were raised in the investigations early on.”

Childs said he fully expects the new Congress to focus on a variety of other issues early on, and that it’s likely the GPO debate won’t come to the forefront and be addressed until later in the year.

However, Childs identified some common themes that may mean good news for GPOs.

First, bipartisanship will drive the process even more than before. That’s because the Democrats hold a very slim majority in the Senate, compared to the Republicans in the previous session, so more reaching across the aisle may be prevalent. Second, a number of new Democrats elected seem to be more conservative politically, he noted. Third, Childs said he expects the new Congressional players to develop a broader awareness of the market, focusing less on the GPO side and more on what device and drug manufacturers are doing and how that’s affecting market dynamics.

“The bottom line is that this issue won’t go away,” Childs said. “So we’re not taking our eye off the ball, and that’s the Initiative. We’re focused on being ethical leaders in healthcare. We just need to communicate that effectively and directly to Sen. Kohl. We will want to sit with him early next year. There remains a lot of questions but we’re very clear on what our focus is.”

Mark Leahey, executive director of the Medical Device Manufacturers Association, which has advocated GPOs be held to a higher ethical standard, be more competitive and improve their conduct, acknowledges that Congressional bipartisanship may mean fewer attitudinal changes than predicted.

“Fortunately for the folks interested in improving the healthcare system and healthcare GPO operations this has been a bipartisan issue since Day 1 so we’re not sure of the [political] impact,” Leahey said. “Based on media coverage I’ve seen to date there seems to be an emphasis on making the reforms lasting and permanent.”

Leahey also wants to make sure that MDMA keeps the debate on the right track and not veer off on issues that sidetrack from the big picture.

“We’re not interested in getting into the weeds about sole source and bundling,” he said. “Our key is to sever the financial ties between suppliers and GPOs. Sole source and bundling represent more of the symptoms of the problem. We feel that the cure for the problem is eliminating those financial ties. That’s our focus moving forward. We see it as a conflict of interest.

“We’re trying to find some common, middle ground here. We want to focus on the fee structure and not micromanage the process. It’s the only way to get this behind us. We don’t want GPOs to go away but we think they’ll operate better if hospitals pay the bills. It’s a battle because so many hospitals fear the unknown, and the GPOs have done such a great job convincing them of Armageddon. But we feel it’s a bluff. This will force GPOs to be more efficient.

“Whether [the GPO] issue rises to the level of interest of Medicare Part D and other healthcare issues remains to be seen,” he added.

Childs emphasized that Premier winning the Baldrige Award simply justifies and recognizes the GPO’s efforts toward establishing and implementing high ethical practice guidelines. Critics charge, however, that Premier CEO Richard Norling’s seat on the Baldrige Foundation’s board of directors may have played a role, which both Norling and Baldrige Foundation officials have vehemently denied in published media reports. Norling offered to resign his board seat, but was told it wasn’t necessary, according to a report in USA Today. Most noteworthy was that Premier won in the service category and not in the newer healthcare category.

Leahey dismissed the impact and relevance of Premier’s good fortune, launching a good-natured barb at the government. “This is probably another example of the left hand not talking to the right hand,” he quipped.