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

  • RIT Saunders College of Business – Lowenthal Hall Addition

    RIT Saunders College of Business – Lowenthal Hall Addition

    Established in 1999, the Education Design Showcase is a vehicle for showing off innovative — yet practical — solutions in planning, design, architecture, and construction. RIT Saunders College of Business's Lowenthal Hall Addition has been recognized with an EDS 2026 Project of Distinction award in the category of New Construction.

  • Cal Poly Humboldt Starts Construction on Healthcare Education Hub

    California State Polytechnic University, Humboldt in Arcata, Calif., recently announced that work has begun on a renovation project that will turn the Stewart Building into a new Healthcare Education Hub, according to a news release. The university is partnering with Sundt Construction Inc. for construction services.

  • Children walking along bright school corridor with motion blur

    How Next-Gen Design Is Reshaping the Student Experience

    The environments where students learn play a crucial role in shaping their growth in and out of the classroom. By centering design on well-being, flexibility, and purpose, districts can ensure their facilities remain vibrant community assets for many years to come.

  • Year-Round Schools Require Year-Round Indoor Air Quality Planning

    While many schools are out for the summer, year-round schools follow a more “balanced” schedule with shorter, more frequent breaks spaced throughout the school year. Even though this offers educational benefits, these facilities have less downtime for building maintenance. This can become an issue when facilities managers overlook the importance of routine HVAC maintenance and air duct cleaning services.