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Group Purchasing Organization (GPO) Optimization


Often hospital systems feel that they are not maximizing the benefits of the relationship with their group purchasing organization (GPO) and more often they do not know if they are. Business relationships of this type can become stale and musty as a result of complacency or the lack of time, resources or the correct insight to better manage them.


However because of the time, resources and costs required to complete a GPO assessment by comparing the potential opportunities that could be realized from alternative GPOs, they are avoided. In the majority of cases when an assessment is completed the hospital system winds up remaining with their incumbent GPO.


HCSB offers an interim program called GPO Optimization. In this process HCSB personnel act as objective third-party facilitators and in a series of steps ensures that the hospital system has maximized the benefits available from their GPO membership. During this program the following items are among those to be addressed:


  • Cash return from GPO to member
  • GPO rebate programs
  • Contract review
  • Purchased services programs
  • Use of local contracting
  • PPI management
  • Clinical programs



Past Experience:


·         In a 450 bed stand-alone hospital in the Mid-west HCSB’s intervention between the client hospital and its GPO resulted in the GPO proposing programs with a potential cost reduction of $2M.

·         In a 1200 bed/four hospital system in the Mid-west HCSB’s work as an intermediary between the client and the GPO realized a $300K bottom line reduction for the system in the first year. In the following years the benefit would range from $212K to a potential $600K/year depending on the growth of the hospital system. In a separate review of other potential programs an additional possible savings of $512K was identified.

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