GPO
From HMCwiki
GPOs (Group Purchasing Organizations) enter into contracts with suppliers on behalf of hospital members. By representing a large number of hospitals a GPO can leverage purchasing power and negotiate lower prices from suppliers.
GPOs are funded in large part by fees they receive from suppliers. Because of this, GPOs are able to offer procurement services to their members at little to no cost. These services include:
- Identifying quality products
- Preparing requests for proposals
- Negotiating contract terms
GPOs ability to leverage economies of scale to achieve reductions in the costs of supplies help organizations maintain quality of care in an affordable way.
Anticompetitive issues
Because GPOs are paid by manufactures whose natural tendency is to raise, not lower, prices there is often a conflict of interest between the revenue stream and the hospitals that GPOs serve. Manufactures can hold significant influence over GPOs, potentially cornering a market in a supply type through long-term lucrative contracts. This influence can prevent lower cost, higher quality, products from entering an organizations supply chain and does not guarantee that organizations are in fact getting the best price.
The purchasing power GPOs yield can lead to anticompetitive behaviors by creating high barriers of entry for smaller manufactures who can not promise the same revenue stream as larger manufactures. Also, the purchase agreements hospitals have often restrict or prohibit the purchase of products from other suppliers.
Types of purchase agreements
According to a study of seven GPOs, conducted by the United Sates General Accounting Office[1], the types of agreements varied. One GPO in the study required hopitals to commit to an overall dollor purchasing level of 80% for products available through the GPO, although the percentage could vary for individual products. Other GPOs reported establishing hospital commitment levels in certain contracts in order to obtain a certain price level, but hospitals were not required to buy under the contract or at the commitment level to retain GPO memebership. Some GPOs' contracts included multiple, or tiered commitment levels so that hospitals can choose from a range of commitment levels and obtain price discounts accordingly.
Negotiating tips for GPOs by Contract Purchases and/or Members
Based on your experience from negotiating with the GPOs listed below, please provide any suggestions/tips others would find helpful in their future negotiations with these organizations. Also, please feel free to add any purchasing organizations you do not see listed here.
By sharing the collective knowledge found through negotiating experiences with GPOs you and others will benefit from the challenges and successes others have had.
To provide suggestions please use the edit feature associated with each GPO.
AllHealth
AmeriNet
Broadlane/BuyPower
CHAMPS Management Services
Child Health Corporation of America
Consorta
Council Connections
Dialysis Purchasing Alliance
GeriMed
Greater Hospital Association of New York/Innovatix
Healthcare Purchasing Partners International (HPPI)
HealthTrust Purchasing Group
Hospital Purchasing Service
Healthcare Services of New England (HSNE)
Joint Purchasing Corporation (JPC)
MAGNET
MEDVantage
Managed Healthcare Associates (MHA/MedEcon)
MedAssets/HSCA
MedBuy
Mercy Resource Management
Metro Chicago Healthcare Council
National Oncology Alliance
NHS Purchasing and Supply Agency
Novation
Pharmaceutical Buyers, Inc. (PBI)
Premier
S.A.R.E.L.
Shared Services Healthcare
SYNERNET
University HealthSystem Consortium
VHA
Sources
References and Resources
^ United States General Accounting Office, "Use of Contracting Processes and Strategies to Award Contracts for Medical-Surgical Porducts", 2003
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