Group Purchasing Organizations … What is a group purchase organization and what can it do for my business? How can this apply to my private practice?
I find this topic one of those quick lessons that can be so powerful in healthcare and even more powerful for small practices where even small expenses can add up and impact your revenue.
A group purchasing organization (GPO) is an entity that helps healthcare providers and businesses capture savings by being a part of a larger network to leverage volume and negotiate better rates with vendors – manufacturers, suppliers, and distributors.
Helpful facts – In 2014 it was shown that GPOs save healthcare systems up to $55M annually and can save providers 10-20% on supplies. By 2022 GPOs will reduce healthcare spending by $864B.
As we have seen, post-COVID supply inventory and pricing continue to be a challenge. While traditionally, GPOs have been associated with either the public sector or large companies, there are advantages to belonging to GPOs that serve small practices. Small practices need to keep their expenses low to not only survive but thrive.
GPOs work by getting a large number of practices or providers to join forces and therefore get huge volume discounts for their members. Realistically, small practices do not attract the best prices or services from their suppliers. Being a member of GPO gives you access to contracts, competitive pricing, and other resources.
When looking for a GPO here are some things to consider:
As always, tracking and trending your expenses can give you insight into areas of opportunity within your own practice.
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