Organ Transplantation and the Link to Life

While the healthcare group purchasing industry has evolved over the years to include sophisticated product selection based on patient outcomes and reimbursement data, one thing has stayed the same: achieving our goal requires a delicate balance of supply, demand, and timing. Falling short in any one of those areas can put lives at risk.

My interest in getting the right products to the right patients at the right time is what drew me to devote my own time and resources to LiveOnNY. As a past board member, I’ve seen firsthand the enormous amount of coordination required to successfully operate LiveOnNY, the nation’s second-largest organ procurement organization (OPO), dedicated to providing organ and tissue recovery services for the New York metropolitan area. It is one of just 58 OPOs in the United States. Under federal law, these are the only organizations that can perform organ recovery services.

Like purchasing groups, OPOs are neither healthcare providers nor suppliers. These transplant networks sit in-between, connecting critical organs with the patients who literally cannot live without them. So during April, which is National Donate Life Month, I want to add my voice to the call for organ donors in the Greater New York area and across the United States.

The need for organ donors has reached an all-time high. Right here in my own community, more than 10,000 New Yorkers are awaiting organ transplants. Nationally, that number rises to more than 120,000. In this country, an average 22 people die every day waiting for organ transplants. A new name is added to the waiting list every 10 minutes.

While the need to save lives is by far the most important driver for organ donation, organ transplantation is also a prime example of a healthcare treatment where the long-term outcome far outweighs the near-term costs. For example, the cumulative cost of dialysis for a patient waiting to receive a kidney transplant will surpass the cost of transplantation after only two years. And after five years on dialysis, the cumulative cost is nearly double that associated with transplantation. So, in addition to saving lives, organ donation helps contain healthcare costs.

The need for organ donors is significant and undeniable. But what can one person do to solve such a huge problem? It’s as simple as going to and completing an organ donor registration form. A single organ donor can save up to eight lives.

Anyone can make this gift, which will keep on giving. I can’t think of a more powerful legacy.

Lee H. Perlman

Already registered as an organ donor and want to help spread the word during National Donate Life Month? Here are some simple ways you can use social media to share the importance of organ donation:

  • Create an ad with your personal story as part of the Long Live NY campaign:
  • Add badges to your profile and get sample wording for posts from the United Network for Organ Sharing:
  • Customize your Facebook or Twitter profile picture to show your support:

New Relationship between Buyers and Sellers in Healthcare

Recent regulatory decisions by the Centers for Medicare and Medicaid Services solidify the move from payment for volume to payment for value. The final rule on access to Medicaid benefits aims to use better-informed, data-driven decisions to guide healthcare delivery for beneficiaries. Additionally, Medicare has launched a demonstration program to provide bundled payments to hospitals for hip and knee replacements, but only skilled nursing facilities that have a quality rating of three stars or higher will qualify for waivers to receive patients discharged after a shortened hospital stay.

These are two examples among many that illustrate how healthcare delivery is changing. Regardless of ongoing political and legal disputes surrounding the Affordable Care Act, the shift to a new healthcare ecosystem that revolves around patient outcomes is permanent. Providers will no longer get paid solely on a per-procedure basis. As a result, they are both consolidating ownership and sharing risk. But what tools will the broader healthcare system use?

I’ve discussed how new technology and an influx of patient data have combined to make healthcare increasingly measurable. This ability to match healthcare inputs to patient outcomes creates an unparalleled opportunity to foster a new relationship between buyers and sellers in the healthcare industry. Sharing outcomes data and then producing the highest quality product both encourages more transparency in the relationships between manufacturers and providers, and demands collaboration.

Lee H. Perlman, President, GNYHA Ventures, discusses product innovation

Ultimately, what providers – and the GPOs they work with – want is to pay the right vendor the right price for the right outcome. On the provider side, hospitals and health systems have adopted value analysis committees to review purchasing decisions and lead product conversions when they identify products that result in better outcomes. For example, New York City Health+ Hospitals overhauled its procurement system to extensively incorporate clinical data and outcomes into decisions that govern a $500 million annual purchasing budget.

This value-based approach to procurement encourages medical suppliers to embrace the use of data and provide evidence for value assessment. Within the medical device industry, calls for manufacturers to address hospital value analysis suggest objectively measuring the real-world performance of products, collecting data on outcomes from a cost-efficiency perspective, quantifying cost reductions, and making an ongoing effort to generate and share outcomes data. Suppliers that use data in this manner to respond to the needs identified through value analysis will have a market advantage; however, those seeking a greater competitive edge in the new healthcare ecosystem need to go a step further.

Suppliers that truly embrace the new realities of an outcomes-based healthcare system are redefining their relationships with providers by embarking on risk-based contracting.  For example, St. Jude Medical, a device manufacturer, said it will pay hospitals a rebate that is 45% of the net price for cardiac resynchronization therapies (CRT) if the CRT doesn’t perform as expected in the first 12 months. This is a huge change in how hospitals and GPOs do business with suppliers. Other companies, like Medtronic, are creating analytics programs to help customers improve clinical outcomes and streamline product use. We at GNYHA Ventures wholeheartedly embrace the shift from volume to value and want to do more work with vendors that adopt a cost, quality, outcomes (or CQO) approach to performance optimization.

Lee H. Perlman, President, GNYHA Ventures, discusses differentiated value

In healthcare, innovation is a necessity. To flourish, providers and suppliers must stay ahead of the curve, or at the very least, adapt to industry changes and improve. As providers increasingly embrace cost and quality data in purchasing decisions, and suppliers increasingly share outcomes and take on risk, the new relationships will produce real changes in healthcare delivery that ultimately benefit the patient.

Lee H. Perlman

To hear more about the changing dynamic between buyers and sellers in healthcare, register for the Modern Healthcare Supplier Strategies Summit on April 5 in Atlanta, Georgia. Mr. Perlman will deliver the opening keynote in this daylong event that brings together industry-leading providers, insurers, suppliers, innovators, and entrepreneurs.


Supply Chain: Leveraging Product, Process Innovations for Better Outcomes

A recent article in The New York Times questioned whether the mergers taking place in the health insurance industry—and elsewhere in healthcare—would stifle innovation by driving down competition. While the impact of provider and payer mergers remains to be seen, I think the idea that fewer players will diminish innovation belies the idea that the remaining players, post-merger, have the dual incentive of reducing costs while improving quality. That, I would argue, is the heart of the current innovation challenge for the industry.

People often assume that health innovations must be expensive new lifesaving drugs or high-tech equipment that will inherently drive costs up. In reality, innovation is about creating more effective processes, products, and ideas. Innovation can be simple yet effective changes to products or protocols that improve patient outcomes and reduce the overall cost of healthcare.

In some cases, innovation may be driven by healthcare suppliers looking to improve a specific product. Examples that have garnered recent attention include

  • redesigned bags for IV fluids featuring better labeling that’s easier to read in a medical emergency. In a recent study, medical trainees were twice as likely to choose correct medication when it was stored in bags with these redesigned labels. Such outcomes may help reduce the estimated annual 98,000 deaths in U.S. hospitals that are due to medication errors.
  • flooring made from impact-absorbing materials to prevent injuries from falls in nursing homes. One study concluded that such flooring can reduce injury rates by 59% over traditional flooring.
  • an adjustment to hospital gowns that gives patients more privacy. In one test, newly designed gowns led to a rise in patient satisfaction score. Similar long-term results could potentially offset added costs from the new gowns if they prove helpful in increasing patient compliance and lowering readmission rates.

In other cases, a stakeholder in the healthcare value chain, such as a group purchasing organization, may drive innovation that leads to better outcomes. Several years ago, the team at GNYHA Services partnered with our GNYHA hospital colleagues to address central line-associated bloodstream infections (CLABSIs). Through an Association-based CLABSI reduction collaborative, area hospitals became aware that patient care workers often lacked the proper materials required to insert a central line at the point of care, prompting them to improvise with other supplies. Over time, this practice increased the infection rate.

Through the collaborative, GNYHA Services worked with an interdisciplinary CLABSI reduction team to develop central line kits. These kits packaged all of the supplies needed to insert a central line (drape, tubing, catheters, gowns, etc.) in one bundle. When area hospitals adopted these kits, CLABSI rates in the ICU dropped by 54%, with 53% of collaborative hospitals reporting no infections for six or more consecutive months. This case is just one example of the power of supply chain innovation to solve a problem and foster a significant overall improvement in patient outcomes, ideally leading to shorter hospital stays and fewer readmissions.

Of course, healthcare innovation can also be higher tech and higher cost—prompting healthcare executives to ask what the ROI is on newly introduced state-of-the-art products. It is incumbent on the supply chain to collect and analyze product data to determine the comparative effectiveness of new products against existing treatments, with the obvious question being, is the added benefit of this product worth the additional cost?

To answer this question, we must view comparative effectiveness on a spectrum. One often cited example is biologic versus synthetic mesh for hernia patients with comorbidities. The price of biologic mesh is six times that of synthetic; however, the cost avoidance benefit that comes with infection prevention in certain patient populations far outweighs the initial product investment. Armed with this type of patient outcome data, suppliers have begun to respond to questions of value by taking an innovative risk-sharing approach to selling their innovations, a topic I’ll cover in a future blog entry.

As regulatory and market forces continue to change reimbursement models, both suppliers and healthcare providers are recognizing the more competitive landscape puts financial pressure on both sides. Supply chain professionals are in a unique position to lead a clinically integrated, data-driven approach to balancing investments in new products and treatments with quality and reimbursement outcomes, ensuring a steady flow of innovation across the healthcare continuum.

Lee H. Perlman

Medical Cost Dollar Sign

A Firsthand Perspective on the Value of GPOs

Suman Gidwani Leeder Guest Blog:
By Suman Gidwani

How do we define success in healthcare? I frequently weighed this question during my internships over the past two summers: one at Columbia University Medical Center’s Neurological Intensive Care Unit and the other in the Strategic Contracting Services Department at GNYHA Services.

As an undergraduate considering a career in healthcare, I initially focused on the relationship between healthcare providers and patients, and the resulting delivery of care. Working in the ICU, however, I was struck by the complexity of the highly specialized technology that is integral to each patient’s treatment. The ICU machines sustain life for gravely ill patients. But as I learned during my internship at GNYHA Services, this technology simultaneously contributes to the increasing cost of care.

Witnessing the relationship between treatment and technology sparked my interest in the business side of healthcare. Physicians can’t always focus on the cost of care at the point of delivery. Decisions that impact cost often occur long before treatment. Then how does a hospital make these choices so that they offer the best value yet still lead to the best possible outcomes for their patients?

My work at GNYHA Services showed me how group purchasing organizations play an important role in the healthcare equation by balancing costs with patient care outcomes to deliver value. As technology has improved, healthcare has become increasingly measurable, and the role of GPOs has evolved. Healthcare supply chain is no longer about finding the lowest price, but rather finding the best value by merging clinical data and financial information. By helping providers deliver the best outcomes in the most cost-effective way, GPOs contribute to better patient care throughout the healthcare system.

GPOs like GNYHA Services strategically evaluate and choose the products they put on contract, aiming to find the best value for both the patient and the healthcare provider. Consider a product such as a small patch that monitors a patient’s vital signs then enables healthcare providers to access them through a mobile app. Among other benefits, this product allows patients to leave the hospital earlier, provides continuous monitoring, and can replace a number of other devices, thereby reducing cost and maintenance. When evaluating this product, the GNYHA Services contract specialists determined that the patch would be more effective as a single-use device rather than having a replaceable chip that nurses would have to switch frequently. Even though the initial cost might increase slightly with a single-use product, efficiencies created by reducing the amount of nursing time required would more than offset the cost, creating more overall value for hospitals while still leading to better outcomes for patients. In this way, GPOs not only take price into account, they also consider the clinical benefits that products offer those receiving and delivering care.

With supply chain accounting for more than 40% of total healthcare expenses in some sectors[1] and spending on care that doesn’t improve health outcomes totaling more than $750 billion per year in the U.S.,[2] it’s clear that finding a strategic approach that delivers better value is paramount. My internship taught me that GPOs can contribute substantially to this goal by helping hospitals achieve the best patient outcomes in the most cost-effective way.


Suman Gidwani worked as an intern in the Strategic Contracting Services Department of GNYHA Services during the summer of 2014. She is currently a senior at Duke University and expects to graduate with a BS in neuroscience in May.


1. Ebel T, Larsen E, Shah K.  Strengthening health care’s supply chain: A five-step plan. McKinsey & Company. September 2013.

2. Jauhar, S. Busy doctors, wasteful spending. The New York Times. July 20, 2014.


GPOs Work Behind the Scenes on Front Lines of Ebola Response

The important work of group purchasing organizations has been the subject of several recent studies, including a new survey sponsored by the American Hospital Association and conducted by Lawton Robert Burns at the Wharton School. While I am heartened that Burns found that GPOs produce savings and “help hospitals with services beyond supply-chain management that include clinical improvement and value analysis,” I believe there is an additional piece of the GPO story that is critical: supply chain emergency response.

Read the rest of Lee Perlman’s guest commentary at