Memo to the Congressional troika of Sens. Herb Kohl (D-WI), Bill Nelson
(D-FL) and Charles E. Grassley (R-IA): The year 2002 called and wants its
artificially inflated controversial issue about group purchasing
organizations back.
Yes, the Senate Finance Committee’s Subcommittee on Antitrust,
Competition Policy and Consumer Rights is returning to the trough from which
it apparently wasted taxpayer dollars seven years ago to educate itself on
how the GPO industry operates. This senatorial troika, apparently hoping to
cash in on the healthcare reform publicity circuit with their respective
electorates, could have taken discussions about GPOs to the next level.
For example, they could have explored how GPO operations, for better or
worse, contribute to financial framework of the healthcare system, as well
as how their services may impact – directly and indirectly, the clinical
outcomes of tax-paying citizens as patients funding the overall system. They
could have more directly tied GPO operations to President Barack Obama’s
administrative-defining singular issue of healthcare, er, healthcare
insurance reform, which their colleagues on Capitol Hill have been debating
and "windsocking" in the media for months.
Instead, they retread. Apparently hoping for that deer-in-the-headlights
reaction, the troika dispatched mildly aggressive letters to seven of the
nation’s leading GPOs (one of which is part of another) that asked virtually
the same questions that should have been answered (and, by and large, were)
seven years earlier. Those questions involved describing in detail all of
what GPOs do for clients, what kind of payments they receive for what
services and from whom, what kind of criteria they use for product
selection, how sole-source contracting works and the nuances of "bundled"
discounts.
Guess they threw out all that paperwork when the Bush Administration left
town.
Still, they should be able to unearth much of this basic information in
the annals of Congressional testimony and via numerous corporate and media
websites. But unless they’re establishing a case for alleged illegal
activities (which this fishing expedition can’t even fake), requests for
specific contractual details from privately held companies – even ones
trumpeting transparency – oversteps some clear boundaries separating
business and politics, er, government. Only one of the 10 largest GPOs is a
publicly traded corporation. Yet the federal Departments of Defense and
Veterans Affairs are part of that elite group. They adopted and implemented
a number of private-sector practices back in the 1990s. Neither was served
with such silly inquisition papers.
What a shame. These politicians could have constructively contributed to
the wheel-spinning healthcare reform discussion and at least encouraged a
brief accelerator-driven skid mark.
Let’s be honest. Group purchasing as a concept isn’t the issue and
shouldn’t be. Most everyone recognizes that it works because many successful
businesses outside of healthcare – like Walmart, for example – can attribute
part of their growth to it.
Instead, the issue involves funding mechanisms. How GPOs make money.
Let’s be realistic. Both the Bush and Obama Administrations demonstrated
a complete disregard for America’s capitalistic free enterprise economic
system by usurping control of the domestic publicly owned banking/financial
and automotive industries. Essentially forcing banks and finance companies
through publicly borrowed bailout funding to change their practices, which
technically were legal, and firing the CEO of the nation’s largest auto
manufacturer, extended the government’s reach well beyond the Reagan
Administration deregulating the airlines back in the 1980s.
Yet, we don’t see the government waving bailout bucks or boardroom
bounce-outs as leverage against GPOs, hospitals and insurance companies. Nor
should it.
Of course, when the Justice Department green-lights two independent
hospital systems in Georgia to collaborate on group purchasing services as
it did a few weeks ago, tiny cracks and fissures developing in the
Congressional strategy start to become evident.
To their credit, however, the senatorial troika wisely is zeroing in on
one area of GPO operations that should be the crux of their motivation –
something I wrote about seven years ago. Unfortunately, GPO