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

  • Quattrocchi Kwok Architects Opens New Office in Denver

    Education planning and design firm Quattrocchi Kwok Architects (QKA) recently announced that it has opened a new office in Denver, Colo., the firm’s third overall. QKA is headquartered in Santa Rosa, Calif., and runs an East Bay Area office in Oakland.

  • Deferred Maintenance Issues Growing at Universities, Gordian Reports

    U.S. colleges and universities are falling increasingly behind on facilities maintenance and repair, according to Gordian’s 13th annual State of Facilities in Higher Education report. The deferred capital renewal burden has reached $156 per gross square foot, an 8% increase over the previous year.

  • Phoenix School District Breaks Ground on New Prep Academy

    The Creighton Elementary School District near Phoenix, Ariz., recently broke ground on a campus replacement for Biltmore Preparatory Academy, according to a news release. The new space will allow the school to expand its enrollment by 50 percent for K–8 students and accommodate modern, collaborative learning styles.

  • USC Launches Major AI Initiative After $200M Gift

    The University of Southern California in Los Angeles, Calif., recently announced that it has launched a “transformational” new AI initiative thanks to a $200M gift, according to a news release. The project will leverage AI toward breakthroughs and innovations in subjects like the health sciences, business, security, and the arts.