In the new pay-for-performance era of health care,
supply chain leaders must develop comprehensive strategies to meet the challenge to reduce costs and become more efficient.
A vital tool in that strategy is partnering with an engaged group purchasing organization (GPO). I have been engaged in the supply chain management/group purchasing industry for more than 20 years and have seen the GPO space change significantly. These changes have included significant consolidation of GPOs themselves to a continual “re-inventing” of the products and services we offer to our customers. In fact, when I began in the industry, a GPO was not much more than a portfolio of contracts and prices. In the early 2000s, the prediction was that GPOs would be quickly rendered obsolete by the dotcom revolution. That could have been the case except for two key things:
- The healthcare supply chain industry is extremely complex and fractured — and most every health care organization has its own preferences.
- GPOs continue to evolve and compete. We have learned (and continue to learn) how to bring additional value to our customers. Our industry continues to evolve in many areas, beyond the price in our portfolios, toward a more comprehensive, consultative approach, built around listening to the specific needs of customers, gaining a deeper understanding and developing solutions that are unique or customized to their needs.
Some of these areas include:
- Price accuracy — using data tools and technology to review pricing, insuring that invoices are accurate at the time of product delivery.
- Clinical specialists— to individually work with our customers in different health care segments, such as pharmacy, laboratory, radiology, dietary, materials, technology, nursing and quality.
- Education — GPOs, through their internal resources and in partnership with suppliers and other entities, can now provide education in many health care disciplines. For example, our strategic education partner has developed a program to provide those in the supply chain arena the ability to prepare for supply chain certification. Revenue management, supply chain optimization, energy management and value-based purchasing are some other non-traditional areas where we can also now provide tremendous value.
But, although supply chain management is a complex and challenging arena, there are a number of relatively easy steps that can be taken to reduce costs, reduce variability in care and provide high quality care to patients. Don’t overlook the easy opportunities, especially in the areas of standardization and data optimization:
- Cost reduction through standardization — your GPO can provide data that, with a quick review, can allow you to find numerous products that are similar (both in design and use) and vary in price. In some instances, the same product by different distributors can be found at markedly different costs.
- Collection and use of supply chain data — with the increase in transparency we have been able to provide excellent benchmarks and goals for organizations to use to reduce extreme variability in pricing in both commodities and implants. In many situations, products that are similar, but manufactured by different vendors, can be reviewed and evaluated by the users and declared comparable. The best price option then becomes a key differentiator. Comparables and equivalencies allow us to look at economics (price and cost) data, provide high quality care for the patient and do it by providing great value to the patient and the institution. Expanding on this formula, your GPO can do this for you in a wide variety of areas beyond pharmacy, including lab, DI, and med surg and non-clinical areas such as facilities, foodservice, telecom and IT.
In conclusion, all major GPOs have evolved to become excellent sources of information — evaluating data, reducing duplication, determining comparable products — all in an effort to support our customers and their goal of reducing costs and delivering high quality health care. Always key to this discussion is not to overlook some of the easy and very effective tools supply chain leaders have to help make a difference. But whether complex or easy, these resources and services continue to answer the question of what value do GPOs bring me and my organization?
About the author: As president and CEO since May 2007, Todd Ebert oversees the strategic vision and operational direction of Amerinet Inc., a national healthcare solutions organization dedicated to providing practical solutions to help members reduce healthcare costs and improve health care quality.