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Running head: GROUP PURCHASING ORGANIZATIONSGroup Purchasing OrganizationsStudents NameInstitutional Affiliation1GROUP PURCHASING ORGANIZATIONS2Group Purchasing OrganizationsDq 1The underlying idea behind GPOs that suppliers generally agree to five better pricesfor customers that buy in large quantities. Therefore, if hospitals merged to buy items, theywould benefit from a lower price. Nonetheless, GPOs are increasingly becoming ineffectivein availing price breaks for hospitals/providers taking advantage of the provider; therefore,GPOs are becoming bad for the healthcare industry.GPOs inflate prices in the healthcare industry. Since the bill exempting GPOs fromanti-kickback provided for in Medicare Law. These organizations were allowed to collectfees/kickbacks from the suppliers sales revenues. The action almost serves as a bribe; thesuppliers able to provide the most kickback is preferred over the others (Litan & Singer,2010). On the other hand, suppliers recoup the fees paid out to the GPO by revising theirprices upwards. As a result, the hospitals obtain items at unnecessarily higher prices whichare passed on to the patient as higher prices for service. A higher price while the valueremains constant is inefficiency as the hospitals and patients are incurring more for lessvalue.Moreover, GPOs have reduces the ability to negotiate with suppliers. The higher theseorganization buy the products and services the higher compensation they ...


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