June 12, 2023 by Medigroup
Group purchasing organizations (GPO) have become an increasingly popular purchasing pathway in the healthcare industry. Today, there are more than 600 GPOs in operation throughout the U.S. and Canada.
However, perhaps due to their popularity and power, there has been a great deal of misinformation circulating about GPOs. These GPO myths may have made you hesitant to join one, or shy away from learning more. In this article, we go over what GPOs are, and five of the most popular myths about GPOs that need to be debunked.
The function of GPOs is right there in the name. A GPO is an organized coalition that works together to negotiate purchasing from suppliers, similar to how collective bargaining works with labor unions. They leverage group purchasing power to get better deals for their members.
There is a lot people get wrong about GPOs. Whether that’s due to outdated perceptions of the organizations, fear mongering from companies that GPOs negotiate with, or just a lack of information there are a few myths that persist. In the following section, we go over the most popular and pervasive myths, and give you the truth about them.
It is true that in some cases, you may be able to negotiate a more favorable deal with a supplier without a GPO. However, doing so requires a lot of work building relationships and going back and forth at the negotiating table. It also means doing that for each individual supplier.
So while you may find a supplier who’s willing to offer you a deal on one or a handful of products, building those relationships and striking those deals just isn’t feasible for all but the biggest of companies. As a singular customer, you also don’t have a lot of bargaining power.
A GPO, on the other hand, combines the purchasing power of your company and others like it. This gives the GPO lots of leverage, since losing a supply contract to many companies at once would be a major hit to a supplier’s bottom line. On top of that, the GPO does the negotiating for you, giving you time to focus on other parts of your business.
It’s possible to get better savings on one or a few products through a direct relationship with a supplier, but a GPO has a much better chance of getting a deal. Your GPO will also be able to negotiate many products at once for you, as opposed to you having to work out deals individually.
Some GPOs do have minimum purchase requirements, but not all. The best ones won’t require you to purchase a larger quantity of any product than you want or need for your business.
There is also a part of this myth that suggests that a GPO may force you to buy more kinds of products than you need as well. Again, this may be true of some GPOs. But a good organization won’t ask you to buy anything other than what you’d already be purchasing anyway.
A GPO should be there to advocate for your interests and the interests of other group members. If you feel like that isn’t the case, find one who does.
While some GPOs have minimum order restrictions and may pressure companies into buying things they don’t need, the best healthcare GPOs don’t. You have choices when it comes to which GPO you join, so make sure to find one that suits your needs.
Healthcare GPOs are the original GPOs in the U.S. and are still the largest type of GPO in the country. But you don’t have to be a healthcare company to join one these days.
For starters, there are GPOs in many other industries. You’ll find GPOs for industries such as grocery and food supply, hospitality, legal, and industrial manufacturing.
But you can also join a healthcare GPO even if your company does not explicitly work in the healthcare field. If you use products that healthcare companies also use, joining a healthcare GPO can help you get better deals on those products, regardless of the function of your business.
Any business can join a GPO. That includes healthcare GPOs even if your business isn’t a healthcare business. GPOs exist to negotiate supply purchasing, so if you use the same supplies as a healthcare business for your company, joining one can help you get better prices on the things you need.
Some people are led to believe that only companies with large spending budgets can join a GPO. It’s true that some GPOs place minimum order quantity and minimum spending requirements on their members, but there are many out there that don’t.
Most GPOs – especially high-quality ones – don’t have size requirements for their member companies, either. Companies of any size can join one and take advantage of the collective purchasing and negotiating power they offer.
Even if some GPOs have spending or ordering requirements your business is too small to meet, you can find many other options that don’t have such restrictions. Your GPO should help you with your supply purchasing, regardless of how large or small your company is.
All GPOs serve the same purpose – helping companies get better deals on the supplies they purchase. However, the differences between them are often significant.
As mentioned earlier in the article, some GPOs place restrictions on how much members have to buy and what kinds of products they have to buy, while others don’t. Some specialize in certain products, while others serve more general needs.
In addition, GPOs often have relationships with different suppliers than one another, even if those relationships aren’t necessarily exclusive. You’ll also find differences in the prices they can get for their members, even on the same products from the same suppliers. And some GPOs offer more support for their members than others.
This is why it’s important to consider your GPO options carefully. No single GPO is going to be the right option for everyone. When you evaluate an organization, make sure you consider the specific needs of your business.
Every GPO offers the same service to its members, but that’s often where the similarities end. There can be stark differences between them in many areas, such as the suppliers they work with, the prices they get, and the support they offer to their members.
Many myths about GPOs can make people understandably hesitant to join one. But the truth is that if your business purchases products regularly, you can probably benefit from joining a GPO. They offer the kind of collective bargaining and purchasing power that most companies can’t do on their own, resulting in better prices on supplies for their members.
However, it’s important to understand that not all GPOs offer the same value to their members. Some have restrictions and requirements that may not suit your needs. There are also differences in the suppliers they work with, the products they procure, the prices they can get, and the support they provide members.
Ultimately, you’ll want to carefully evaluate your GPO options before joining one. Make sure to consider your needs first and then find an organization that best serves them.
What are examples of GPO healthcare?
GPOs in healthcare typically have hospitals, clinics, urgent care centers, medical supply stores, nursing homes, and other related businesses as members.
How do GPO contracts work?
GPO contracts work by negotiating prices on products with suppliers for their member organizations. In most cases, member businesses still have the option to choose other products.
What does GPO stand for in pharma?
GPO stands for group purchasing organization in pharma and other industries. They use the collective purchasing power of their member businesses to negotiate prices with suppliers.
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