GPOs evolve to meet new demands

It’s not just about purchasing anymore

Group purchasing organizations have traditionally been seen as a way for hospitals and healthcare providers to save money on supplies. However, in the current economic environment, as providers are squeezed from all sides, many are looking to their GPO for more than just purchasing.

“The first benefit is savings. That’s why hospitals and healthcare providers work with GPOs, for the high volume to secure discounts,” said Curtis Rooney, president of the Health Industry Group Purchasing Association.

However, Rooney predicts GPOs will be expected to do much more in the future.

“One trend will be a big uptick in use of GPOs. With everyone focusing on cuts in Medicare and Medicaid payments and reimbursement issues with healthcare reforms, GPOs are being called upon to help with these transitions,” said Rooney.

“There is more of an interest in using the GPO in ways that go beyond group purchasing. They have branched out to include value analysis, patient safety, IT systems and more,” he added.

“A lot of GPOs are adding revenue cycle management to their offerings to make sure billables are paid on time. They are also coordinating the supply chain with the clinical practice. They are doing more with less,” said Rooney.

Todd Ebert, president of Amerinet, a St. Louis-based healthcare GPO, says that in his 20 years in the industry, GPOs have gone from being simply a portfolio of prices to a service-oriented partner in the effort to drive expense out of the supply chain and other healthcare cost centers.

“Providers are much more open to changing (how they use their GPO) now than prior to healthcare reform,” said Ebert. “They know they need to be effective and efficient with the supply chain.”

“Now we have customers who will literally say to us, ‘I want to know where the best opportunities for me to save money are,’” said Ebert. “It’s an ongoing process to bring customers the best value.”

Ebert agrees with Rooney that GPOs are now offering more products and services than ever.

“I challenge our organization to work hard for our customers. We work with them to develop a plan, to listen to their goals and help them dig into some of the things that they could use help with. We develop a plan that is measurable and quantifiable,” said Ebert.

Ebert asks his staff to be assertive in bringing cost savings opportunities to their clients, such as finding non-name brand suppliers with comparable products and devices at lower costs.

“With healthcare reform, the biggest trend is that reimbursements are going down. Providers are asking, ‘how are we going to maintain our viability?’ They are looking to Amerinet and other GPOs to help them achieve that goal,” said Ebert. “They’re going to have to make some tough choices.”

“I think this is going to be a tremendously difficult year for providers,” concluded Rooney. “With diminishing dollars from government programs, GPOs will be challenged to up their game to help hospitals get through this storm.”

For more on the supply chain, see bit.ly/hfn-supply.