According to the April 2009 study by Eugene Schneller, PhD, "The Value of Group Purchasing — 2009: Meeting the Needs for Strategic Savings," group purchasing organizations save the U.S. healthcare industry approximately $36 billion dollars annually. For an ambulatory surgery center looking to control the amount it spends on supplies, partnering with a GPO may be the most effective means to that end.
"The benefit [of partnering with a GPO] is the cost savings," says Debbie Hall, RN, MBA, administrator at High Plains Surgery Center in Cheyenne, Wyo. "There is a greater margin between expense and payments received for cases performed at the surgery center."
However, it's essential that ASCs pick the right GPO. The relationship between an ASC and a GPO is typically a mutually beneficial one. But if the ASC does not take certain points into consideration before deciding on a partnership, it may not receive the best prices possible for its supplies. Here are four points to consider:
1. The GPO's contracts. According to Shirley Hines, RN, CASC, LHRN, administrator of Atlantic Surgery Center in Daytona Beach, Fla., it's important to look for companies that contract with vendors offering products for the high-volume specialties at the ASC. "The more you buy, the lower the price you get," she says. "For example, if your ASC has a high urology volume, look for GPOs that have several contracts with urology companies."
The GPO can contract for a much lower price if the volume of the specialty is high, she adds, and it results in a higher discount than what an ASC would receive dealing directly with a vendor or an equipment company.
2. Efficiency and legality. Partnering with an efficient GPO is important for ASCs looking to sign partnership papers, according to Ms. Hall. Inefficient GPOs could lead to wasted time, which would have an adverse impact on surgery center functions.
Ms. Hall also says to think twice before signing with a GPO that does not have the appropriate forms ensuring the legality of the partnership.
3. Options outside the GPO. "I like having the option of negotiating on my own with certain vendors," says Ms. Hines. "There are certain supplies that you commonly use — the things that you buy over and over — and you can contract for those. But you may have specialty items that you want to negotiate for and you want to be able to compare the pricing yourself."
It's important that ASCs retain the right to contract with certain vendors individually because there are cases in which an ASC can get better pricing outside a GPO. For example, an ASC may find a small vendor located geographically closer and can offer lower shipping and handling costs. In this case, it might be a disadvantage for a surgery center to have all its business tied up in a GPO. "You want to retain that choice," says Ms. Hines.
4. Physician buy-in. It's important that deciding on a GPO is a group effort, says Ms. Hines. ASC administrators need to make sure physicians understand the reasoning behind the decisions being made. Administrators need to be able to justify why the GPO partnership makes sense and why the products being bought are superior. "It is not always about the money," she says.
It's also key that administrators consider physician input, especially if the surgery center is small and physician-owned. "I allow quite a bit of physician input," she says. "If they don't like it, then they aren't going to use it."
Ultimately, ASCs need to partner with a GPO that is a good fit for its purchasing efforts, and will have a positive impact, says Ms. Hall.
"Do your homework — look at the pricing that different GPOs offer and have your volumes in place so that you can give GPOs accurate numbers," says Ms. Hines. "Salesmen are wonderful and they can sell you anything, and GPOs are the same. But remember, what may be great for one person may not be great for the next."
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"The benefit [of partnering with a GPO] is the cost savings," says Debbie Hall, RN, MBA, administrator at High Plains Surgery Center in Cheyenne, Wyo. "There is a greater margin between expense and payments received for cases performed at the surgery center."However, it's essential that ASCs pick the right GPO. The relationship between an ASC and a GPO is typically a mutually beneficial one. But if the ASC does not take certain points into consideration before deciding on a partnership, it may not receive the best prices possible for its supplies. Here are four points to consider:
1. The GPO's contracts. According to Shirley Hines, RN, CASC, LHRN, administrator of Atlantic Surgery Center in Daytona Beach, Fla., it's important to look for companies that contract with vendors offering products for the high-volume specialties at the ASC. "The more you buy, the lower the price you get," she says. "For example, if your ASC has a high urology volume, look for GPOs that have several contracts with urology companies."
The GPO can contract for a much lower price if the volume of the specialty is high, she adds, and it results in a higher discount than what an ASC would receive dealing directly with a vendor or an equipment company.
2. Efficiency and legality. Partnering with an efficient GPO is important for ASCs looking to sign partnership papers, according to Ms. Hall. Inefficient GPOs could lead to wasted time, which would have an adverse impact on surgery center functions.
Ms. Hall also says to think twice before signing with a GPO that does not have the appropriate forms ensuring the legality of the partnership.
3. Options outside the GPO. "I like having the option of negotiating on my own with certain vendors," says Ms. Hines. "There are certain supplies that you commonly use — the things that you buy over and over — and you can contract for those. But you may have specialty items that you want to negotiate for and you want to be able to compare the pricing yourself."
It's important that ASCs retain the right to contract with certain vendors individually because there are cases in which an ASC can get better pricing outside a GPO. For example, an ASC may find a small vendor located geographically closer and can offer lower shipping and handling costs. In this case, it might be a disadvantage for a surgery center to have all its business tied up in a GPO. "You want to retain that choice," says Ms. Hines.
4. Physician buy-in. It's important that deciding on a GPO is a group effort, says Ms. Hines. ASC administrators need to make sure physicians understand the reasoning behind the decisions being made. Administrators need to be able to justify why the GPO partnership makes sense and why the products being bought are superior. "It is not always about the money," she says.
It's also key that administrators consider physician input, especially if the surgery center is small and physician-owned. "I allow quite a bit of physician input," she says. "If they don't like it, then they aren't going to use it."
Ultimately, ASCs need to partner with a GPO that is a good fit for its purchasing efforts, and will have a positive impact, says Ms. Hall.
"Do your homework — look at the pricing that different GPOs offer and have your volumes in place so that you can give GPOs accurate numbers," says Ms. Hines. "Salesmen are wonderful and they can sell you anything, and GPOs are the same. But remember, what may be great for one person may not be great for the next."
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