History of GPO's

The first healthcare GPO was established in 1910 by the Hospital Bureau of New York. For many decades, healthcare GPOs grew slowly in number, to only 10 in 1962.

The growth in number of GPO's was stimulated by Medicare and Medicaid and in 1974, there were 40 GPO's and over the next 3 years, that number tripled. The institution of the Medicare Prospective Payment System (PPS) in 1983 placed a greater focus on cost reduction and fueled even further rapid GPO expansion.

By 2007, there were hundreds of traditional GPOs and similar entities that were receiving substantial revenues from vendors in the form of administrative fees. By this time, 96% of all acute care hospitals and 98% of all community hospitals held membership in at least one GPO. In addition, 97% of all non-profit, non-governmental hospitals participated in some form of group purchasing.

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