8. GPOs: Differentiated or Commoditized?

The preceding chapter makes the case for the pro-competitive and welfare-generating impacts of GPOs. As stated earlier, “GPOs are certainly not be as bad as their critics say they are.” This chapter makes a different point. GPOs are intermediaries in the healthcare value chain performing contracting and supply chain functions. Such functions are largely “back office” and opaque. Like other intermediaries—such as insurers and product distributors—it is hard to get excited about the GPOs. Moreover, given their back-office role, it is hard to distinguish one from another and talk about excellence. The point here is that “GPOs may not be as good as they think they are.” Perhaps Larry David had it right: curb your enthusiasm.