Medical supplies

What Is The Role Of GPOs In The Healthcare Sector?

Buying the items you need at the lowest prices can be difficult as you might lack the purchasing power required to negotiate large discounts from suppliers. This is where the role of Group Purchasing Organizations comes in; they leverage the power of a group of healthcare providers to get the best pricing from vendors. By partnering with a GPO, you can harness the purchasing power of many organizations.

You will get access to pre-negotiated contracts with the top medical suppliers. You will get the benefit of bulk pricing without having to order in bulk. You’d be surprised to know how much you can save on medical supplies, everything from scissors to medical devices.

GPOs Can Reduce Costs For Healthcare Providers And Patients

Group purchasing organizations help reduce costs through two mechanisms: lower prices through joint negotiation and lower transaction costs.

  1. Economic literature indicates that joint purchasing can yield lower prices than buyers can get on their own. A GPO increases your bargaining strength and can help buyers save up to 10 to 18% of costs. Healthcare providers are likely to pass some of these savings to the patients as well. Reduced costs in buying supplies will eventually reduce the expenses of treatments.
  2. The healthcare supply acquisition process involves thousands of suppliers selling many more thousands of medical devices to thousands of healthcare providers. For instance, 1,000 vendors sell ten products each to 2,000 hospitals. Each vendor will bargain separately with each hospital; this will lead to 2 million negotiations to determine 20 million prices. In this case, the GPO will negotiate one price for each product for all its members. As a result, the number of negotiations will fall from 2 million to 1,000 and the number of prices negotiated from 20 million to 10,000. GPOs reduce the number of negotiations which results in lower transaction costs.

A Win-Win Deal For Healthcare Providers As Well As Suppliers

GPOs create an ecosystem where both healthcare providers (buyers) and suppliers greatly benefit.

  1. Healthcare Providers (Buyers): It is obvious by now that each healthcare provider will benefit by combining the buying power of many organizations. There are no purchasing minimums; you can buy as per your hospital’s requirements without having to spend a fortune. There’s a lot to manage when it comes to healthcare; with the help of GPOs, you do not have to worry about cost savings; they handle the entire purchasing process for you.
  2. Suppliers: This model is beneficial for all parties. GPOs ensure that the suppliers provide the best deals for their members, and at the same time, the suppliers are rewarded through increased market share.

By becoming a member of a group purchasing organization, you can provide your patients with the highest quality healthcare services at affordable prices. Once you become a member, you will have access to the largest network of medical suppliers. You will get the best products at the best net prices.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply