Group purchasing organizations (GPOs) play a very important role in the supply chains for healthcare products. A recent industry survey reports that nearly every U.S. hospital use GPOs for purchasing a wide range of products and services. “
U.S. healthcare-product GPOs grew rapidly in the late 1970s and early 1980s in response to pressure to reduce costs.
Michael Greenfield CEO of Prime Source GPO, a large healthcare GPO, explains the role of GPOs in today’s market. “There is a constant, rising demand for hospitals, nursing and rehabilitation centers, assisted living facilities and other healthcare organizations to manage costs, lower fees and improve services.
As the role of GPO’s grows, their benefits and services have grown accordingly. There are many ways a provider can make the most out of their group purchasing organization.
Group purchasing organizations use a portfolio of contracts that providers can access to save money through aggregated purchasing power. They review and analyze providers’ supply chain data on a regular basis to find opportunities to save money. This allows members to more effectively manage areas, including physician preference items, supply expense, finances, operations and profitability. Many GPOs also help members increase savings providers through assessment, standardization and utilization services, as well.
According to Mr. Greenfield, when partnering with a GPO, it’s important for providers to communicate regularly to constantly look for new ways to increase efficiencies and uncover cost savings.