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

  • Montclair State University Starts Construction on $120M STEM Building

    Montclair State University in Montclair, N.J., recently broke ground on a new $120-million Interdisciplinary Science Building, according to university news. The university partnered with HoK Architects for the project’s design, and it’s scheduled to open in time for the 2028–29 academic year.

  • Dallas-Area District Debuts Three New Facilities

    The Duncanville Independent School District in southwest Dallas, Texas, recently held ribbon-cutting ceremonies for three new facilities that resulted from a $170-million bond program passed in 2023, according to a news release.

  • Johns Hopkins Starts Construction on New Residence Hall, Dining Facility

    The Homewood Campus of Johns Hopkins University in Baltimore, Md., recently began construction on a new residence hall and dining facility, according to university news. The work involves demolishing the existing Alumni Memorial Residence Hall I, which was built in 1923, to make room for the new facility.

  • ZeroEyes, Academic Innovators Partner to Provide Safety Solutions

    ZeroEyes, which produces a multi-analytics weapons detection and threat intelligence platform, recently announced a partnership with Academic Innovators, according to a news release.