HealthTrust Specialty GPO helps members find the best value
American consumers expect to be able to shop for what they want at different places, and to buy the products they want from whichever seller has the best price. But not everything works that way. Shopping under the restrictions of class of trade could go against experience and expectations, but HealthTrust can help optimize opportunities.
Class of trade 101
Buying pharmaceuticals and other supplies for your hospital is not the same as buying an iPhone for yourself, says Mohammed Elayan, PharmD, HealthTrust’s Director of Oncology Pharmacy Clinical Operations. In the consumer world, you can buy that phone from any number of sellers and pay the best price from the seller of your choice. The pharmaceutical supply chain world, however, is different.
“The thing that’s tricky about class of trade is that it restricts where you’re allowed to shop,” Elayan explains. “For example, a manufacturer tells a health system: ‘You are a hospital. Even though you have a clinic, you can’t shop at the clinic store. You have to go to the hospital store.’ And at the hospital store, the drug is more expensive than at the clinic store.”
To exacerbate the situation further, he adds, “The manufacturers tell you where and what you can buy and for how much.” With the manufacturers restricting eligibility based on class-of-trade designation, they, in essence, also control price. “From the GPO perspective, our hands are tied on what prices we can offer our members because the manufacturers won’t allow our members to access the most optimal pricing for their specific area,” Elayan explains. “That makes it challenging for us to bring our members the most optimal value.”
And, further complicating things, there is neither standardization nor consistency across manufacturers in their class of trade definitions.
“It’s consistently inconsistent across manufacturers,” Elayan says. “Each manufacturer has its own definitions.” He explains it like this: One manufacturer tells you to wear a suit and blue tie to shop at a particular location. You get to that location, and you can go right in. You go to another location wearing the same suit and blue tie, but the manufacturer there says you need to wear a green tie. And a third manufacturer tells you your tie should be red, and a fourth, that it should be red and blue striped.
This lack of standardization and consistency makes it troublesome for a hospital or health system to achieve the access they need because everything is contradictory. With unstandardized definitions of what a specific class of trade is, it is difficult for a GPO to qualify everyone for access to better pricing.
HealthTrust uses its leverage for members during negotiations. “We advocate for a more agnostic class of trade where we ask the manufacturers to not restrict who can access what price, because our members are diverse. They do outpatient, they do inpatient, they do all kinds of services, and it’s not fair to tell them, ‘We’ll only ever see you as a hospital even though you do these other services,’ ” Elayan says.
Optimizing class of trade
To mitigate the class-of-trade challenges that members face, HealthTrust launched a new program in January called HealthTrust Specialty GPO to provide class-of-trade optimizations.
“HealthTrust’s Specialty GPO Team does an evaluation and explains to members the best way to present themselves to manufacturers to expand their eligibility for more optimal contracts,” explains Elayan. Using the analogy of the suit and tie, it helps you figure out which suit and tie combination to wear that meets all the requirements for the most manufacturers.
In class-of-trade optimization, the team examines the same details the manufacturers look at—things such as how services are billed, where a drug is shipped to and how an organization is rostered (its Health Industry Number, or HIN). The team edits the details to best present members to the manufacturers.
Those edits might change the location; for example, shipping a drug to a clinic address rather than the hospital address, or getting a new HIN to more accurately represent the services provided. “It’s working within the rules and regulations to make the details of the definition more optimal,” Elayan explains. “We know what each manufacturer wants and what details they’re looking for in order to make our members the most eligible.”
The efforts of HealthTrust’s Specialty GPO Team has already resulted in savings for those members, Elayan notes. “It’s about 5% of the cost of the drug they’re eligible for,” he says. “That 5% doesn’t seem like a lot, but they spend hundreds of millions of dollars on these drugs, so it adds up over time.”
But the biggest win, he adds, is that we can be a big part of members finding more value they ever have before.
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