Districts would be encouraged to join together in "regional purchasing pools" to achieve better pricing on medical services, including prescription drugs and dental and vision coverage. Alternatively, school districts could also participate in purchasing groups that may be active in the area. The use of health care purchasing pools is a major element of the President Bush's health care reform agenda.

Group purchasing programs are an effective mechanism to address health care costs and quality. The deepest discounts can only be obtained when negotiating from a position of strength. When dealing with the health care system, this strength comes from the size of the group. Discounts can be found not only in provider/facility, pharmacy, laboratory, dental, vision costs but also in the fees charged for administration of the plan. Improvements in quality can also result from purchasing coalition's holding health plans accountable for meeting performance measures. Often these performance measures reflect the quality of care, such as childhood immunization rates.

The regional purchasing pooling in the proposed model approach allows districts to seek the best cost for the product they negotiate rather than negotiating to purchase a predetermined plan as proposed by the HayGroup. Through pooling, smaller districts obtain the critical mass that is necessary to obtain "best pricing" from health care providers and health care plan administrators. Regional pools could be initiated by any one of the key stakeholders, such as the district, its unions or as a joint district-labor initiative.

Purchasing pools, both within and outside of health care services have proven an effective mechanism to control costs. For example, the School Employers Trust (SET)-School Employers Group (SEG) is an autonomous, non-profit organization whose mission is to provide high-quality insurance programs to Michigan school districts and their employees. SEG is the dominant player in Property/Casualty insurance and Workers' Compensation insurance for the public education sector. The SEG Property/Casualty Pool now provides coverage on behalf of approximately 450 participants for nearly 3,000 separate building locations, collectively valued at $13.5 billion. Since 1995, the SEG Property/Casualty Pool has returned over nearly $53 million in the form of premium discounts. The SEG Worker's Compensation program also has a track record of success. From its inception in 1977 through June 30, 2004, the Fund