Group purchasing organizations do more than manage contracts

What group purchasing organizations do for their clients might surprise many people, believes Michael Lozich, vice president and compliance officer of the Broadlane Group, a GPO, who spoke today during a conference call sponsored by the Health Industry Group Purchasing Association. "We don't just maintain a portfolio of national contracts," he said.

The variety of services ranges from supply chain consulting, ecommerce solutions, to benchmarking, patient safety initiatives, revenue management, and equipment repair. The recently released GAO report on GPOs notes that the six largest group purchasing organizations all offer custom contracting, clinical evaluation and standardization and technology assessments. Less commonly offered services include: materials management consulting, materials management outsourcing, revenue management and continuing medical education.

"What this reflects principally is a very competitive industry of GPOs competing against each other," Lozich said. "Each of us has to offer a distinct value proposition."

Much of the rest of the conference call seemed like a commercial for the GPO industry. While experts ostensibly had gathered to discuss the recently released GAO report on group purchasing organizations, the meeting focused mostly on the advantages of belonging to a GPO.

One of the biggest benefits is cost savings, something Bradley LeBaron, president and CEO of UinTah Basin Medical Center a 42-bed facility in Roosevelt, Utah, can attest to. The medical center saved $2.5 million over the past four years due to its group purchasing contract. Belonging to Amerinet helped his hospital save 25 percent on the cost of orthopedic devices in 2007. A "clinical advantage" program helps facilitate large spends in device intensive areas such as cardiology.

Because his small purchasing department's managers stay about four years on average, the GPO also lends invaluable expertise to the manager-in-training, eliminating the need for one to two full-time-employee spots in the department.

According to HIGPA, virtually all hospitals (98 percent) use GPOs. On average, hospitals use two to four GPOs.

To learn more:
- here's the GAO report

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