The value of a GPO is impossible to deny, especially in the healthcare sector, where hospitals want to have a leaner procurement and sourcing team while also saving money. Group Purchasing Organizations can act as an extension of your team, identifying cost-cutting opportunities.

A GPO leverages the spending of its healthcare provider members to achieve price and service levels that are superior to what individual hospitals can achieve on their own. Supplier vendors benefit from the high volume and efficient competitive bid process that comes with multiple contract awards. The Group Purchasing model, as a result of these outcomes, can provide incentives to both healthcare providers and suppliers.

Are you unsure whether a GPO partnership is right for you? Check out these five advantages of becoming a member:

1. A GPO allows you to save money

Aggregated pricing is one of the most powerful advantages of GPO. This means that even small clinics potentially have the same purchasing power and contracts as larger hospitals. This can help any healthcare entity’s budget because the money saved by using a GPO can be spent elsewhere. Furthermore, GPO contracts are frequently broad in scope, covering the entire category offering of the awarded supplier. Contracts are non-exclusive, with no mandatory contact commitments, allowing healthcare providers to choose the contracts that best meet their needs.

2. A GPO saves you time

You are not alone if your organization is short on resources and personnel. It’s not uncommon to manage hundreds of contracts, each with its own lengthy solicitation and review process. Even a simple contract can take months to complete. Group Purchasing Organizations relieve pressure on purchasing departments by reducing the number of hours spent on the solicitation process and the ongoing maintenance of individual contracts. A GPO will simplify your process. When a healthcare organization joins a Group Purchasing Organization, it no longer has to track hundreds of supplier contracts. Instead, the GPO manages all contracts. In the long run, this streamlined approach can save time and money.

3. A GPO will demonstrate compliance

A GPO’s top priority should be compliance. Nothing else matters if you don’t comply. To ensure that their agreements are fair, open, and transparent, a GPO will hire compliance, legal, and contract experts. They also act as a portal for healthcare providers to meet their compliance obligations.

4. A GPO will assist you in obtaining long-term value

With multi-year supplier contracts, GPOs can provide long-term value. When you use a GPO to lock in pricing, you get a long-term price guarantee. A typical GPO supplier contract is three years long, with one or two year extension options. A good GPO will actively manage those contracts, conducting business reviews with suppliers and obtaining performance feedback from healthcare providers.

5. A GPO will assist you in achieving savings that go beyond price

Though the primary goal of a GPO is to provide members with the most products at the lowest possible cost, this should never be used as an excuse to overlook quality. A good GPO encourages members to collaborate with suppliers to identify qualitative as well as quantitative improvements that will provide them with best-in-class service. A GPO considers total cost of ownership in addition to initial savings, which can aid in inventory reductions and process improvements.

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