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Supplying Your Practice: Should You Join A GPO

The Private Medical Practice Academy

Supplying Your Practice: Should You Join A GPO

March 18, 2022

Supplying Your Practice: Should You Join A GPO

When you run a private practice, you become acutely aware of what supplies you need, think about where to procure them, and worry about prices. 

To start with, make a list of supplies that you everything you need:  drugs, syringes, gloves, paper for your exam table, cleaning supplies and more. Include how often you are using these supplies because we’ll need this info to figure out the quantities you need to order. 

You’ll want to develop an inventory system will help you track how often you use each item and when you need to reorder. 

Before I talk about where to buy supplies—buying  for your practice is no different than buying anything else. You need to comparison shop. There is tremendous variability in pricing. 

You can buy from individual vendors. Create an excel spreadsheet –put the item name in each row and the vendor in the column so that you can compare prices of vendors. You will also want to consider buying from a General Purchasing Organization (GPO).

GPOs were endorsed by Congress as a means of lowering prices in the medical supply market with the expectation of lowering healthcare costs. But not all GPOs are equal.  You will want to shop GPOs. . 

How do GPOs source and negotiate prices for products and services?

 GPOs help source and negotiate prices for drugs, medical devices, and other products and services for healthcare providers.  GPOs don’t take own or take possession of the product. They are the middlemen. GPOs have increasingly been trying to differentiate themselves from one another by offering additional value-add services to further reduce costs or improve efficiencies.

If GPOs are middlemen, how do they save healthcare providers money?

It is simply an economy of scale issue. It takes time and effort fr a supplier to negotiate a price for every item it sells with every healthcare provider that wants to purchase that item. GPOs can decrease costs by lowering transaction costs and prices through joint negotiation. 

How much can I save with a GPO?
GPOs can save providers 10% to 18%.

How else can a GPO benefit me?
As a small private practice, you may discover that it is difficult to obtain certain products at the scale you need them. Joining a GPO can help you procure the product because they have a steady inventory and a lower per unit cost on each order. 

GPOs pre-screen vendors to reduce the risk of working with a problematic supplier. GPOs also has access to more member reviews. You can save time and manpower because your staff doesn’t have to screen each vendor for every purchase. 

How to choose a GPO?
You will need to vet any GPO that you want to join. Start by asking other medical practices that you know. There are many large national, regional and local GPOs. Combine that with the ability to join multiple GPOs, easily switch from one to another and the result is competition for members and greater incentives for providers. 

Can I belong to more than one GPO?
In case I haven’t been clear enough, you can belong to more than one GPO. You can belong to multiple GPOs and still buy from individual vendors.

How much does it cost to join a GPO?
Some GPOs are free, some charge a membership fee. The membership costs usually pay for themselves after the first order so the fees should not be your defining consideration. 

If you'd like to hear more tips on how to start, run and grow your practice and related medical businesses, sign up for my newsletter at https://www.thepracticebuildingmd.com. and join my FB group, The Private Medical Practice Academy.

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