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Is Your GPO Just a Service Provider or a Genuine Partner?

By , SVP CHC Supply Trust September 13, 2022 Supply Chain

Presumably, your hospital’s group purchasing organization (“GPO”) is saving you money on supplies, but how does it measure up otherwise?

A lot of relationships between hospitals and their GPO turn out to be purely transactional as opposed to true partnerships—once the contract is signed, ongoing support and communications are lacking. During the height of the pandemic and subsequent surges of COVID cases, it became all too clear to many rural and community hospitals that they were just another number to their GPO. Some GPOs went so far as to “ghost” smaller hospitals in dire need of supplies. 

That’s not how a partnership works. 

No one anticipated the pandemic, but it came. No one was ready for the ensuing supply chain disruption, but it happened. It’s during times of trouble that cracks in a relationship become more apparent, leaving many hospitals to question whether their GPO cares about and caters to their supply chain needs, customer satisfaction, and long-term success.

As with human relationships, hospitals should avoid the rebound effect—leaving an inattentive GPO and assuming the “courtship behavior” of a prospective new partner will persist. 

If you’re reevaluating your existing GPO or vetting a new one, ask these questions to assess the organization’s partnership potential. 

    1. Can the GPO quantify your savings? Before you commit to anything, will the organization analyze your current spend and show how much you can save on products you are already buying? As a client, will your hospital receive ongoing data analytics and business intelligence on product and purchased-services savings opportunities? 
    2. Does the GPO conduct national supply spend benchmarking? This comparative analysis uncovers cost-saving opportunities and is a key factor in contract negotiations.
    3. What does the GPO deliver besides cost savings? Pre-pandemic, pricing tended to be the deciding factor when choosing a GPO, but customer service and crisis preparation have proven to be of utmost importance, as well. A GPO should have a diversified product contracting strategy and alternate-vendor relationships. In addition, a GPO should offer value-added services, including custom contracts for physician preference items with no additional fee. 
    4. Does the GPO have clout and capital? Can it leverage relationships with manufacturers to fulfill big orders on compressed timelines? Is the GPO acquiring manufacturing facilities to step in when demand exceeds supply? 
  • Does the GPO offer guided onboarding and continued support? A true GPO partnership is two-way and dynamic. Price-setting is not a “set it and forget it” process, and assistance with supply procurement during times of scarcity is a must. Rural and community hospitals in particular need support and collaboration but too often get short shrift from GPOs that prioritize larger hospital systems.

When evaluating a GPO, first impressions matter. From the get-go, CHC Supply Trust goes the extra mile by providing a Complimentary Supply Spend Analysis comparing the cost of items your hospital already purchases to pricing available through HealthTrust (our GPO partner) for those exact same items.

A cost savings analysis is illuminating, but the time commitment required of the hospital is important to know in advance, as well as what specific data needs to be provided. CHC Supply Trust’s Complimentary Supply Spend Analysis is followed by a “high touch” onboarding process and continued support for hospitals that partner with us. That support includes monthly analytics and quarterly meetings with a dedicated account manager to review the analytics in order to optimize supply chain spend and tier level.

Success in any relationship requires self-awareness. Rural and community hospitals should keep their mission top-of-mind when evaluating GPOs, and find a GPO that explicitly supports it.

By , SVP CHC Supply Trust September 13, 2022 Supply Chain
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