By Kester Freeman
Former CEO, Palmetto Health
A recent article in Hospitals & Health Networks discusses a survey in which hospitals across the country report they are very satisfied with the group purchasing organization (GPO) they work with to help manage supply costs and negotiate contracts. In fact, many materials managers explain that it is really not an option not to have this relationship with a GPO because of the cost savings involved.
The article points out that:
More than 70 percent of survey respondents reported GPO-attributed savings of 5 percent or more on their supply purchases, while 25 percent reported savings of more than 11 percent.
"As far as GPOs go, any help I can get in taking cost out of the system is a safety net I can't afford not to have," says Ray Moore, board president and system contract manager at PeaceHealth in Bellevue, Wash. "If something is 20 percent of your total operating cost, you'd better have a strategic imperative for making sure you have some direction."
Some of those surveyed explained that they do occasionally negotiate supply contracts on their own, but they never seem to get as much “bang for their buck.” They also point out that many GPOs do so much more than just negotiate contracts. They have tools that help healthcare systems cut waste and operate more efficiently overall.
I am glad to hear that hospitals are being more vocal about their GPO relationships. For many who do not work in hospitals or the healthcare industry, it is a relationship that is often misunderstood and criticized. But when you talk to the people who have the direct relationship with GPOs, you get the facts and you may even learn a thing or two that will help your organization thrive in the future.
Check out the link above to the full report. It is very insightful!
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