The Healthcare Value Chain: Demystifying the Role of GPOs and PBMs

by Lawton Robert Burns

This volume analyzes group purchasing organizations (GPOs) and pharmacy benefit managers (PBMs) in order to better understand the significant roles that these entities play in the healthcare supply chain. It examines who they contract with, on what terms, and who they represent and answer to while charting their historical development. The analysis reveals that the current roles of both players have historical roots that explain why they behave the way they do. Finally, the book reviews the evidence base on the performance results of these two players.



This work fills a void in our understanding about two important and controversial players in the healthcare value chain. Both organizations are cloaked in secrecy — partly by virtue of the private sector contracts they negotiate, partly by virtue of the lack of academic attention. Both play potentially important roles in controlling healthcare costs, albeit using contracting strategies and reimbursement mechanisms that arouse suspicion among stakeholders. This timely text explicates how these organizations arose and evolved to shed more light on how they really operate.

Genres: Health Care

959 pages, Kindle Edition

Published October 19, 2022

Reviews

[Austin Barselau · Rating 5 out of 5]

In The Healthcare Value Chain, Lawton Burns, Professor of Management at The Wharton School at The University of Pennsylvania, has written the singular best resource to demystify two traditionally nebulous purchasing agents in the healthcare ecosystem – group purchasing organizations (GPOs) on the institutional side and pharmacy benefit managers (PBMs) on the retail side. Burns attempts to counteract some of the critical narratives around these organizations by laying bare their modus operandi (pooling payer resources to negotiate with healthcare suppliers), contractual allegiances (hospitals and plan sponsors, respectively), and value-add (negotiating lower prices and presumably passing on those savings to their contractual partners). With this production, Burns has authored the definitive textbook for understanding why these opaque institutions operate as they do, and how they affect the delivery of care down to the consumer level.