Since 1910, when the first GPO (group purchasing organization) was created, the way hospitals select and purchase products experienced a cost-saving shift. Hospitals could now form a network with a GPO to receive better negotiated contracts for the products they were previously purchasing direct. Today, with over 600 active GPOs across the United States, 97% of hospitals rely on at least one of these organizations, and the costs savings they offer, to stay profitable.
Some GPOs have a vast product offering and serve all the needs of the hospital while others specialize in a specific category of products. For example, MedAssets offers a full gamut of healthcare products and is considered to be one of the largest GPOs with over 4,500 hospitals.
When a hospital engages in a membership with a GPO for the first time or when a hospital transfers to a new GPO, thousands of product conversions take place. Though both GPOs may offer the same type of product, such as a patient gown, is it more than likely that variety exists in brands, pricing, quality and even colors. This process can be time intensive and intrusive to the hospital staff due to the vast number of product conversions required to be compliant with a new GPO.
“At Auditrax we try to give as many possible options of same color and type with slight variances, listing out the price of each as well as the quantity you purchase by. For example we would offer a velcro closure green economy size gown that is cheaper than the original, a green back closure double tie that is near the price point, as well as any of the other contract compliant options. Our goal is always to provide the staff with a better product at a better value.” – Sarah, Senior Consulting Manager
Since 2012, Auditrax has worked in navigating hospitals through GPO transitions and product conversions through four key steps.
Identifying the current product.
What is the primary function of the product? What is the cost of the product?
Evaluating the needs of hospitals regarding the use of product.
Who uses this product? How often is the product used?
Reporting alternative products that are available on contract.
How could the product be better? What samples would be helpful to have?
Communicating with additional vendors on contract that offer slight variations in price or quality.
What is the cost difference? What other vendors offer this product?