Group Purchasing Organizations, Buying Cooperatives and the Supply Chain

Group purchasing organizations (GPOs) and buying cooperatives (co-ops) are important players in the healthcare supply chain. Goodwin is a leader in helping GPO and co-op clients conduct business transactions, negotiate with vendors and members (as well as other GPOs and co-ops), and navigate government regulation so that they can grow and prosper. Whether you are seeking capital, restructuring your business, acquiring or disposing of or spinning off businesses, or resolving regulatory matters, chances are that Goodwin has already handled a matter like yours.

Our clients include a wide range of purchasing groups and buying coops, including hospital and health systems, physician groups (including orthopedics, cardiology, oncology and optometry, pharmacies (including retail, specialty and long-term care) and home infusion, durable medical equipment (DME) manufacturers, home health, and dietary food and hospitality groups, as well as trucking and staffing.

Transactions

We assist with mergers and acquisitions, joint ventures and partnering arrangements, restructurings and reorganizations, dispositions and carve-outs, and venture capital and other transactions. We also advise clients on a wide range of agreements with investors, vendors, suppliers, payors, PBMs, PDPs, wholesalers and member customers. We are experienced in advising purchasing group clients on the regulatory compliance issues attendant to transactions, including fraud and abuse issues, safe harbor regulations, and regulatory issues impacting relationships with other participants in the medical supply chain.

Transactions often encompass diverse legal fields such as healthcare, tax, antitrust, environmental, real estate, labor, and employee benefits. Our transactional lawyers frequently collaborate with specialists across these and other areas to address client issues effectively. For instance, they work in close partnership with our tax group to implement strategies that maximize available tax benefits for our clients, including evaluating the implications of Unrelated Business Taxable Income (UBTI) and the taxation of for-profit entities within buying cooperatives. Similarly, our transactional lawyers coordinate with the antitrust team to guide clients on structuring buying groups properly, ensuring compliance with regulations related to competition and information sharing.

Regulatory and Compliance

We handle regulatory issues affecting commercial healthcare transactions, as well as those involving members in the medical and pharmaceutical supply chains, including pharmaceutical and medical device manufacturers and suppliers, hospitals, pharmacies, physicians, outsourcing companies and other providers.

Our experience includes issues under fraud and abuse laws (including the federal Anti-Kickback Statute and safe harbors), Stark, civil monetary penalties law, the False Claims Act, healthcare fraud statutes and the Health Insurance Portability and Accountability Act of 1996 (HIPAA). We also advise clients about their membership in or relations with GPOs, including advice about compliance with the federal Anti-Kickback Statute, and how to take advantage of the safe harbors that may be available. There are a number of payment streams in the GPO-medical supply chain that implicate the federal Anti-Kickback Statute and necessitate safe harbor protection. Our regulatory team brings years of experience in structuring these arrangements in compliance with applicable laws.

We counsel, advise and represent GPOs and co-ops in their arrangements with payors, PBMs and PDPs and in dealing with issues of competition, regulation, and transparency, and help these purchasing groups carefully evaluate and structure those relationships to avoid government scrutiny. We also advise on the federal and state law regulatory issues affecting the practice of member customers, including hospitals, physician groups, pharmacies, DME manufacturers, and home health agencies. Certain purchasers, such as health plans and PBMs, use formularies to promote safe, effective and cost-effective drug use. The U.S. Office of Inspector General has identified several PBM practices as potential risk areas, including relationships with formulary committee members, payments to PBMs, and formulary placement payments. We also assist GPOs and co-ops in dealing with member billing, reimbursement and claims issues, including issues under Medicare Parts A, B and D, Medicaid and commercial payor requirements.