Ensuring the Health of GPO Relationships

Maintaining financial stability is critical for healthcare organizations. The key to protecting bottom lines is ensuring the relationships with the hospital’s group purchasing organizations (GPOs) are both healthy and beneficial. While the purpose of the GPO is securing the best possible product value for hospital members, there is often room for improvement. With an average of 72% of hospital purchases being made via GPO contracts, there is a tremendous opportunity for significant cost savings by taking a closer look at these relationships.

Supplementing GPO Value for the Healthiest Supplier Relationships

GPOs negotiate with suppliers on behalf of multiple healthcare organizations to secure high-value agreements. However, several factors can hinder their efforts. Shifts in the market can skew the savings that are achievable on different product lines. If the GPO does not regularly review and renegotiated its portfolio of contracts, the current savings opportunities may no longer be competitive.  When GPOs fail to react to a fluctuating market, hospitals may miss out on opportunities to reduce costs.

As an alternative, in some cases, utilizing direct contracts or partnering with regional coalitions allow hospitals more flexibility in responding to certain shifts and can yield cost reductions greater than what the established GPO supply contracts can offer. In short, GPO relationships must be analyzed and monitored regularly to ensure hospitals are receiving the best value possible at any given time.

TPC Protects the Health of Bottom Lines

As mentioned, hospitals generally purchase the majority of their products and services via GPOs. While they achieve enhanced value on many items—especially commodities—they may not achieve the best possible value on all items. That’s when hospitals generally employ alternative contracting strategies to negotiate better opportunities, usually on more specific items like physician preference (PPI). To that end, hospitals that engage with TPC have a partner to help them aggregate volume with other Members for regional purchasing power to drive incremental value which allows them to better optimize their GPO relationship.

In other words, TPC is a healthcare facility’s GPO advocate–fostering a mutually beneficial partnership between all parties that results in reducing a hospital’s expenditures. Our supply chain optimization services are focused on delivering direct business value.

Time for a GPO Check Up

Analyzing expenditures on a categorical basis can identify opportunities to reduce spending. When it comes to optimizing the GPO relationship, TPC has the expertise and experience. TPC works tirelessly to ensure Member hospitals are receiving the maximum value for each dollar spent by implementing collaborative strategies to improve financial, operational and clinical performance.

Boosting GPO Effectiveness with TPC

Purchasing in the healthcare industry can be a complex and arduous task, making it difficult to determine whether an organization is receiving best in class value. TPC provides the framework to guarantee facilities are generating the greatest value possible from their supplier relationships, ensuring hospitals can continue to deliver the uninterrupted, high quality care their patients deserve.

Contact our team of experts to learn more about how TPC can optimize the health of your GPO relationship!

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