Group Purchasing Organizations: Healthcare

What is a GPO?
A Group Purchasing Organization (GPO) is an entity that helps healthcare providers (such as hospitals, including university hospital systems; ambulatory care facilities; nursing homes and home health agencies) realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors and other vendors.

How does a GPO “work”?
GPOs do not purchase or buy any products. They negotiate contracts that hospitals can use when making their own purchases. With input from members and clients, GPOs work to negotiate contracts with healthcare manufacturers, distributors and other suppliers. After a group purchasing contract is created, it is still up to the hospital to decide which product is most appropriate in each circumstance and make the most appropriate purchase. Most healthcare providers make purchasing selections in a committee setting, usually comprised of healthcare professionals, such as doctors, nurses and other clinicians. These committees help determine which medical supplies are most appropriate from a clinical standpoint. Hospitals and other healthcare providers remain free to make non-GPO contracted purchases and often do.

What type of healthcare entities use GPOs?
All types of healthcare organizations use group purchasing. Nearly every hospital in the U.S. (approximately 96 percent to 98 percent) chooses to utilize GPO contracts for their purchasing functions. Additionally, estimates are that hospitals across the U.S. use, on average, two to four GPOs per facility. A growing portion of the long-term care, ambulatory care, home care and physician practice markets are using group purchasing to help lower costs and improve efficiency. Further, the federal government also provides group purchasing services to various executive branch agencies.

Source: The Healthcare Supply Chain Association (HSCA, www.supplychainassociation.org) is a broad-based trade association that represents 16 group purchasing organizations, including not-for-profit and for-profit corporations, purchasing groups, associations, multi-hospital systems and healthcare provider alliances. HSCA’s mission is to advocate on behalf of healthcare group purchasing associations, to provide educational opportunities designed to improve efficiencies in the purchase, sale and utilization of all goods and services within the health industry and to promote meaningful dialogue between GPOs.

This article originally appeared in the issue of .

Featured

  • Fort Collins to Convert 1980s Office Park into Junior High School

    The Liberty Common School, a charter-public school in Fort Collins, Colo., recently broke ground on an adaptive reuse project that will convert an 1980s-era office park into a 45,000-square-foot junior high school for seventh- and eighth-grade students, according to a news release.

  • University of Kentucky Sees Positive Results from Energy Efficiency Program

    The University of Kentucky in Lexington, Ky., recently announced the results of its Energy Program in Facilities Management, put into place eight years ago, according to a news release. Between the fiscal years of 2017 and 2025, the university’s campus grew by 13.6% while the energy use per square foot dropped by 19.2%.

  • Lewis C. Cassidy Elementary School

    Established in 1999, the Education Design Showcase is a vehicle for showing off innovative — yet practical — solutions in planning, design, architecture, and construction. Lewis C. Cassidy Elementary School has been recognized with an EDS 2025 Grand Prize award in the category of New Construction.

  • Greenheck Launches Optics Sensors for Kitchen Hoods

    Greenheck recently announced the launch of factory-installed optics sensors as an enhanced option for its kitchen ventilation hoods, according to a news release.

Digital Edition