GPOs Help the Bottom Line

Group Purchasing Organizations (GPOs) have proven to save hospitals and physician practices a vast amount of money over the years and with the continual increasing financial pressures being placed on healthcare providers, their use is certainly likely to rise. Hospitals alone have shown savings of 10% – 18% as GPOs help to reduce non-labor spending. GPOs also have other services that clients value such as data analytics, purchased services, clinical outcomes data and revenue cycle.

The Wharton School of the University of Pennsylvania recently conducted a national survey of hospital executives. The resultant data from 1,210 executives is the largest number of respondents to any such survey. Here are some highlights of the survey’s findings:

90% of U.S. hospitals utilize a GPO and report being satisfied with the results

40% reported using two GPOs

88% state GPOs save them money via lower prices; 86% experience huge cost savings

84% obtain savings from contract standardization

66% state their GPO’s role and impact has grown over the past five years; a majority of respondents have an average relationship length of 11 years with their GPO

58% state their GPO provides valuable benchmark data

54% report that their GPO does not block them from accessing innovative manufacturers

One drawback appears to be with procuring physician preference items. Only 39% rely on their GPO to do this procurement, whereas 55% claim to get better prices on these items by not going through their GPO contract.

The survey can be found here.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

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