February 13, 2024- Healthcare providers initially formed GPOs in the early 1900s as an efficient means to aggregate purchasing volume, drive competition among suppliers, and reduce healthcare costs. Today, traditional healthcare GPOs serve as the sourcing and contracting partners to hospitals, long-term care facilities, surgery centers, clinics, and other healthcare providers across the country. GPOs secure high-quality medical products at fair prices for the benefit of patients, providers, Medicare, Medicaid, and taxpayers. Both independent and industry funded studies confirm the effectiveness and tremendous value of GPOs, finding that GPOs deliver annual cost savings of 12-18%.
Through their comprehensive sourcing and contracting process, GPOs allow smaller providers to obtain critical supplies at the same value as large providers while allowing all healthcare providers to focus on their core mission: providing first-class patient care.
GPOs take a comprehensive approach to sourcing and contracting that not only accounts for the competitive price offered, but also the quality, reliability, and stability of supply. The GPO business model is voluntary, flexible, and clinically driven. GPOs work in close collaboration with member hospitals and healthcare providers to develop sourcing policies and contract award decisions. GPOs recognize that market conditions change, and when they do, work with suppliers to adjust contracts. GPOs work diligently to ensure member hospitals and providers can select the products they need to care for their communities and patients most effectively and provide clinical resources across their network of providers.
Read More in the latest issue of The Journal of Healthcare Contracting.