Publisher’s Letter March/April 2006

Choosing your GPO. The decision becomes more complex every year!

A few weeks ago, I reviewed a compilation of comparative GPO statistics between 2004 and 2005. The results were astounding. It seems like every year the amount of facilities with access to GPO contracts increases, as well as the reported dollar volume of supplies and services that came to market under contract.

Some of the numbers that really jumped out were the following:

  • GPO contract volume increased from $90 billion to over $111 billion from 2004 to 2005 – a 19 percent increase.
  • The major GPOs claim a combined 13,625 acute care hospitals. This is an average of 2.5 GPO relationships per hospital. This average is up 10 percent in just one year.
  • The major GPOs claim over 184,000 alternate care facilities as members. Last year those same GPOs touted 159,000. This means that in one year, 25,000 alternate care facilities were added to GPO membership.

It seems that the integrated delivery networks (IDNs) have again voted with their dollars on how they feel about the value GPOs provide.

Because of the sheer dollar volume of this marketplace, the decision by IDNs on what GPO partner to choose has become more important. Today, GPOs offer so many services above and beyond contract portfolios. Because the offerings of GPOs may now include technology products, consulting services and clinical know-how, to name a few, an IDN’s choice is harder than ever.

In this issue you will find the first part of a two-part series exploring how GPOs differentiate from one another. I think you will find the differences of the organizations and where they see their place in the value chain interesting.

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.