Skip to main content
Add as a preferred source on Google

Group Purchasing Organizations: Healthcare

  • 09/01/14

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

  • Round Rock ISD Completes New Early College High School

    Round Rock ISD near Austin, Texas, recently announced that construction is complete on a new, 46,500-square-foot campus for Early College High School, according to a news release. The new facility will allow the school’s students and staff to move from portables into a permanent building and increase its enrollment to 500.

  • College of the Desert Hits Construction Milestone on New Campus

    College of the Desert recently announced that the construction of its new Palm Springs Campus in Palm Springs, Calif., recently reached a major construction milestone, according to a news release. The college is partnering with general contractor C.W. Driver Companies, which recently “topped out” the facility by placing the final beam in its structure.

  • Stanford Completes Construction on Graduate School of Education Facility

    Stanford University in Stanford, Calif., recently announced the end of construction on a new home for its Graduate School of Education, according to a news release. The university partnered with McCarthy Building Companies on the 160,000-square-foot project, which involved two major renovations and one new construction effort.

  • Surging Demand for Student Housing Fuels Major Campus Investment Opportunities

    University leaders throughout the U.S. are accelerating plans to modernize and expand student housing as enrollment stabilizes and demand for on-campus living rebounds. Recent data from the National Center for Education Statistics indicates that total postsecondary enrollment is projected to grow through the end of the decade, with undergraduate enrollment alone expected to increase by more than 8 percent by 2030.