Publisher’s Letter April 2010

GPOs, IDNs and RPCs…

It never ceases to amaze me that manufacturers and suppliers to hospitals and IDNs get mad and confused about GPOs, IDNs and Regional Purchasing Coalitions. When people and their organizations don’t see these organizations as intimately intertwined it doesn’t surprise me they do not have great success with these hospitals and IDNs.

I often ask suppliers to step back and look at the GPOs as a shared resource of its hospital customers. Often times the GPO is in fact (literally) owned by its customers. So when suppliers get frustrated that the contract they have with a GPO is not meeting their expectations, who do they get mad at? The GPOs, right? But who asked the GPO to pursue that contract? The Hospitals, right?

Suppliers also constantly ask what value do GPOs bring for their fee? This is often the hardest question I get from frustrated suppliers. I’d love to tell them “easy market share” shifts, but that is not true. I’d love to tell them unfettered access to their member hospitals, but that is not true. What is true is that suppliers get the opportunity to drive the uptake and success of their contract. Yep … the success of your contracts depends on you the supplier or manufacturer.

Now we see the emergence of Purchasing Coalitions, like the one on the cover, The Catholic Contracting Group. These organizations add another level of complexity – and opportunity – for suppliers. Suppliers are really recognizing these collaboratives as opportunities, but struggle with how best to co-exist within the confines of their GPO strategy and their pursuit for dearly coveted market share gains. I guess it comes back to “all customers are created equal – some are just more equal than others.”

The great hope for suppliers is that the collaboratives will deliver the units and volumes negotiated for in the contract. It will be interesting to watch the next few years, how the dynamics of IDNs, GPOs and RPCs evolve. Now more than ever suppliers and manufacturers must know and understand the needs of their customer’s organization. Much like you hear people say “if you’ve seen one IDN, you’ve seen one IDN.”

I think the same could be said for GPOs and RPCs; they all have different missions, visions, values and needs. Understanding why and how they are unique is imperative to the success of any supplier’s contracting initiative.

Thanks for reading this issue of the Journal of Healthcare Contracting.

About the Author

John Pritchard
John Pritchard is the publisher of The Journal of Healthcare Contracting.