GPO Activities, Conflict of Interest, and Their Adverse Consequences for the Healthcare Providers

Abstract

It should not come as a surprise to most knowledgeable observers that GPOs’ operations have been rife with instances of self-enrichment and practices that are contrary to the best interest of their beneficial clients, that is, hospitals, nursing homes, and other healthcare providers. Our discussion in the previous two chapters suggests that market control, protection from antitrust conduct, and lax regulatory oversight have provided GPOs with an irresistible opportunity for self-enrichment with little downside risk. Under normal circumstances, even under oligopolistic conditions, dominant players would have reason to exercise self-restraint to minimize potential threat of prosecution for anticompetitive behavior. However, when oligopolistic market conditions are accompanied by high growth in revenue, and protection from anti-kickback penalties and anticompetitive behavior, the avarice becomes too hard to resist. The GPO industry is a prime example of this phenomenon.