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

  • California District Debuts New High-School CTE Center

    The West Sonoma County Union High School District (WSCUHSD) in Sebastopol, Calif., recently held a ribbon-cutting ceremony for the new CTE Center at Analy High School, according to a news release. The district partnered with Quattrocchi Kwok Architects (QKA) for the facility’s design and GCCI for its construction, and funding came from local Measure A bond funds.

  • nursing students talk while studying in a hallway

    Elsevier Launches VR Simulation Solution for Nursing Students

    Elsevier has introduced Shadow Health Lab with Virtual Reality, a simulation platform that allows nursing students to interact with virtual patients and build clinical judgment skills in a safe, realistic environment.

  • Washington State University Debuts New Engineering Hall

    Washington State University recently celebrated a dedication ceremony for the new Schweitzer Engineering Hall on its Pullman campus in Pullman, Wash., according to university news. The facility measures 66,288 square feet, and its completion marks the first milestone in a larger university effort to modernize the engineering and design district.

  • Building Beyond Simulation: Creating Immersive Ecosystems for Healthcare Education

    Health sciences education is one of the fastest-growing facility types in colleges and universities. The demand for medical, nursing, and allied health professionals is driving the creation and renovation of medical simulation training facilities that provide students with real-world experience through advanced simulation-based learning.