Research On Multi-Products Healthcare Supply Chain With GPOs

Inadequate and overly expensive medical service is one of the livelihood issues that have received much attention today.In the supply chain of pharmaceutical products from upstream manufacturers to patients,the rising prices caused by the intermediate links of procurement,transportation and other logistics are one of the reasons for the higher pharmaceutical products and consumer costs.The GPO(Group Purchasing Organization)originated in the United States,by gathering the needs of downstream hospitals,negotiate with manufacturers through a large number of purchase scales,and try to reduce the cost of hospital while increasing the profits of manufacturers or expanding the market size.It has flourished in the United States.In 2016,China took the lead in actively carrying out the pilot work of GPO in Shanghai and Shenzhen.Studying the impact of the healthcare supply chain with GPO is of great significance.This paper takes the multi-product healthcare supply chain with GPO as the research object,tries to explore the decision rules of hospitals,GPOs and manufacturers under the condition of hospital purchasing two products,and imitates the pilot work of Shenzhen GPO,restricts the hospital procurement from GPO,discusses the price of the GPO is counterproductive to the demands of the hospital,as well as the decision-making and benefits of the parties in the supply chain in the context of asymmetric information about the GPO and the manufacturer’s demands for the hospital.The main research contents and results are as follows:(1)The decision rules of the three-party game between hospitals,GPOs and manufacturers under the scenario of two hospitals purchasing two products were discussed.This paper makes a mathematical derivation and numerical solution to the game of the three parties in the supply chain,which proves that the difference in the size of the hospital,the difference in the value of the two products,and the difference in the demand for the two products of the hospital will affect the decision and payoff of the three parties.For hospitals,a reasonable combination of different types of products will help reduce hospital procurement costs.For GPOs and manufacturers,we can analyze the results to understand how to adjust decision and CAFs(Contract Administration Fees)to ensure their own profits.(2)The medical supply chain that limited hospitals to purchase from GPOs and the price of GPOs counteracted the demands of hospitals was studied.The study found that in the case of inverse demand function,the sensitivity of hospital demand to GPO pricing affects GPO and manufacturer pricing strategies,but does not change the hospitals’ total procurement costs,GPOs’ and manufacturers’ profits.However,under this monopolistic model structure,manufacturers lack sufficient incentives,and the number of products purchased by hospitals at the same cost is reduced,which is not conducive to the healthy development of the healthcare procurement market.(3)Explore the game between the manufacturer and the GPO of inverse demand and asymmetric information.GPO relies on the informational advantage of the intermediary to grasp the specific demands of the hospital,while the manufacturer only knows the distribution of hospital demands.The study found that when the interests of both the GPO and the manufacturer differ,the GPO may have revealed or true or false information to exaggerate the demand,confuse the manufacturer,and make the manufacturer’s prediction of product demand more favorable to the GPOs’maximize profits.