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Hospital, Heal Thyself

Executive Summary

Some time in the next several months, the hospital group purchasing organization will undergo a level of public scrutiny that it has never experienced before. Two US senators are gearing up to hold hearings on the industry, specifically to explore the negative impact that group purchasing has had on competition among medical device and hospital supply companies. Ironically, one could argue that rather than pitting hospitals against suppliers, group purchasing could eventually prove about as bad for hospitals as it has been for some suppliers. By reducing the number of competitors in product categories, by creating the very oligopolies that small suppliers rail against, GPOs, and by extension the hospitals they serve--have boxed themselves into a corner.

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