Environmental and Organizational Factors Associated with Hospital Use of GPO Services

Given the potential benefits of Group Purchasing Organizations in cost-containment efforts for hospitals on supplies and purchased services, an important question that remains unanswered is what conditions support or hinder the utilization of GPOs by hospitals. Therefore, this study explores the relationship between GPO use by hospitals and their market and organizational characteristics. Data on hospital GPO utilization and other organizational characteristics were combined with secondary hospital market characteristics. Panel logistic regression with random effects and state and year fixed effects analysis was used to examine the relationship between hospitals' utilization of GPO services and hospitals' organizational and market characteristics. Overall, the majority of hospitals utilized the services of GPOs. Specifically, the number of hospitals utilizing the services of GPOs increased slightly from 3290 (72.2%) in 2004 to 3337 (74.4%) in 2013. In regression analyses, hospitals utilizing the services of GPOs operated in an external environment with mixed levels of munificence, more dynamism, and less competition. Specifically, hospitals operating in a less munificent environment are more likely to utilize the services of GPOs. The study findings provide organizational decision-makers and policymakers' insights into how certain market and organizational factors influence hospital strategy choice, in this case, the use of GPOs.