Doctors mull aggregated procurement

For many larger healthcare organizations, group purchasing has yielded significant savings. Physician practices are also mulling whether or not they can achieve savings through aggregated procurement.

Some advantages of aggregated purchasing might include better pricing, better support/service and a national presence as opposed to a regional representative, said Deborah Long, vice president of procurement, contracts and supply chain at W Squared, a technology, consulting and business process outsourcing company offering aggregated procurement for physician practices.

“There are some pockets already of specialized items that get grouped together,” Long said. “So this model can grow, but the challenge will be that it will likely be able to grow more in the back office industry as opposed to a specific company trying to ‘aggregate’ [purchasing].” 

By way of example, Long said a $2 million per year practice could become lined up with a much larger ‘all-in’ spend for their specific items. “On a piece/part cost perspective it is well over double-digit bottom line savings,” Long said.

A disadvantage might be that a practice would have to end a relationship with a long-time supplier, she said.

Eric O’Daffer, research vice president in the Gartner Health Care Supply Chain group, isn’t sold on the idea that aggregated procurement is a good idea for physician practices, mostly because of practical reasons, such as space limitations.

“Physician practices are typically managed a little tighter,” O’Daffer said. “Just the complexity of it means you’re not going to save that much money on inventory because you’re pretty limited on space.”

O’Daffer said that for a general practice, he would estimate $10,000 to $15,000 in supplies per year per physician. “So there’s just not much to manage there,” O’Daffer said. “You really have to see what the value proposition looks like.”

O’Daffer cautioned that practice managers should answer two key questions before committing to aggregated purchasing: “What am I paying to get this in terms of the fee on top of the GPO structure? Is this actually a good financial decision for me?”