Health Care Management Science

, Volume 22, Issue 2, pp 336–349 | Cite as

Dependence and power in healthcare equipment supply chains

  • Jurriaan L. de JongEmail author
  • W. C. Benton


Most healthcare organizations (HCOs) engage Group Purchasing Organizations (GPOs) as an outsourcing strategy to secure their supplies and materials. When an HCO outsources the procurement function to a GPO, this GPO will directly interact with the HCO’s supplier on the HCO’s behalf. This study investigates how an HCO’s dependence on a GPO affects supply chain relationships and power in the healthcare medical equipment supply chain. Hypotheses are tested through factor analysis and structural equation modeling, using primary survey data from HCO procurement managers. An HCO’s dependence on a GPO is found to be positively associated with a GPO’s reliance on mediated power, but, surprisingly, negatively associated with a GPO’s mediated power. Furthermore, analysis indicates that an HCO’s dependence on a GPO is positively associated with an HCO’s dependence on a GPO-contracted Original Equipment Manufacturer (OEM). HCO reliance on GPOs may lead to a buyer’s dependence trap, where HCOs are increasingly dependent on GPOs and OEMs. Implications for HCO procurement managers and recommended steps for mitigation are offered. Power-dependence relationships in the medical equipment supply chain are not consistent with relationships in other, more traditional, supply chains. While dependence in a supply chain relationship typically leads to an increase in reliance on mediated power, GPO-dependent HCOs instead perceive a decrease in GPO mediated power. Furthermore, HCOs that rely on procurement service from GPOs are increasingly dependent on the OEMs.


Supply chain management GPO Power Healthcare Procurement outsourcing 



This study was partially supported by a Grant from the Institute for Supply Management (ISM). The autors would also like to acknowledge the feedback and guidance offered by the Association for Healthcare Resource & Materials Management (AHRMM) and by executives from the four major medical digital imaging equipment OEMs.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Operations Management & Strategy, School of ManagementUniversity at Buffalo, The State University of New YorkBuffaloUSA
  2. 2.Edwin D. Dodd Professor of Management, Department of Management Sciences, Fisher College of BusinessThe Ohio State UniversityColumbusUSA

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