What are GPOs?
GPOs, or Group Purchasing Organizations, leverage the purchasing power of its member healthcare organizations to negotiate discounts and favorable terms with medical device manufacturers, pharmaceutical companies, and other suppliers of healthcare products and services. We encounter GPOs when selling our products to hospitals and non-acute healthcare providers. Every provider has access to contracts with both CONMED and our competitors that can affect the purchasing decisions at their care sites. It’s important to understand your contractual access and that of our competitors.
Independently, ASCs do not possess the purchasing power of larger organizations. GPOs solve for this by aggregating the purchasing power of many Provider organizations. This improves negotiating position and achieves superior pricing. GPOs report savings to ASCs average 10%-18% on products and services they would not have leverage to negotiate independently. For context, total supply savings delivered by GPO contracts was recently estimated at $55 billion annually.* It also reduces the administrative burden in contracting with suppliers.
Know the Parents
Today, many ASCs are part of “parent” healthcare system providers, e.g., USPI, SCA or as part of large IDNs, e.g., HCA, Kaiser Permanente, yet 60% are still independent of large systems. They are all typically affiliated with one of the “Big Three” GPOs and while they maintain decision authority on whom they purchase from, their GPO affiliation often plays a critical part in the purchasing process.
Not all GPOs are Equal
It is important to understand compliance each GPO contract provides, the nature of the agreement in sole, dual, or multi-source positions, and the relationship with the Provider to a company such as CONMED and its competitors. For example, at CONMED we create leverage in working with Provider administration and earning local support. Suppliers will often enhance these agreements, contracting directly with the provider to improve position and reduce competition. These agreements provide contractual access and remove a barrier in advancing opportunities with the provider.