Non-acute providers, such as skilled nursing facilities, ambulatory care centers and primary care providers, are facing many of the same cost pressures as hospitals, but are at times overshadowed by their acute care brethren.
To ease the financial strain, many have turned to group purchasing organizations (GPOs) to reduce supply chain spend through access to discounted pricing on products and services.
Yet, there has not historically been the same level of focus for GPOs in the non-acute space as there has been in hospitals. In turn, some non-acute providers still don’t belong to a GPO, and those that do, are often unfamiliar with how to maximize their GPO relationship.
With the threat of more reimbursement cuts coming in the new calendar year, the need to invest in technology and systems to support requirements of the Affordable Care Act, and the overall uncertain healthcare environment, non-acute providers must continue to find new ways to cut costs.
Here are 4 ways that non-acute providers can leverage a GPO to do so.
1. Aggregation and commitment
The basic GPO model is relatively simple. A GPO leverages the collective supply chain purchasing volume of all of its participants (called “members”) to negotiate discounted pricing with suppliers. But, this is just the start.
If a GPO member is able to commit a high-level of their purchases to a supplier up-front, many suppliers will award the member with even lower pricing. Some GPOs also have aggregation groups within the GPO that bring hundreds, or even thousands, of GPO members together to offer commitment to a supplier as a group in turn for even lower pricing.
Although the GPO model is relatively simple, it can be very difficult for suppliers to manage. A lot of non-acute providers belong to multiple GPOs, which means that suppliers have to manage gigantic GPO member lists with line after line of data to figure out which GPO’s pricing to honor.
This presents a significant risk that the provider will not get the pricing that they expect.
To mitigate this risk, it’s important for a provider to commit to a primary GPO so that suppliers can more easily associate the correct pricing.
2. Look beyond medical supplies and pharmaceuticals
The original reason that a non-acute provider typically signs up for a GPO is to gain access to discounted pricing on medical supplies and/or pharmaceuticals. But, most GPOs offer contracts for a number of other products and services, including office supplies, IT, foodservice, housekeeping products, furniture, facilities and even purchased services.
These non-medical products and services can account for over half of a non-acute provider’s spend. So, take a look around your facility – most of the stuff you see can be purchased at a lower price through a GPO.
3. Supply chain automation
Having thousands of contracts covering hundreds of thousands of products is great, but not if you can’t keep track of them. This is why some GPOs now offer a procure-to-pay solution that allows you to order and manage all supply purchases online.
In addition to creating efficiencies through electronic purchasing, you have transparency to all of your spend and can ensure that you are getting the correct pricing.
Some solutions have more capabilities than others. Capabilities you should look for are: track your supply expense against your budget in real-time, manage and track inventory, 3-way match to ensure that the products ordered were received and the correct price was paid, and capture supply-related revenue.
Also, look for a modular solution, so that you only have to pay for what you need.
No matter how great a GPO’s pricing, it is nothing without communication. It starts when you purchase from a supplier for the first time. Make sure that you let them know what GPO you are a part of and give them your GPO ID – the unique ID that GPOs assign to their members for tracking purposes.
This will help ensure that the supplier connects you to your GPO pricing. And, if you have any issues or questions regarding a GPO’s contracts or offerings, engage your GPO to help you through them.
Some GPOs are taking communication to the next level through social media, networking and best-practice sharing. They are leveraging technology to push actionable information to you, while also making it easy for you to ask questions of staff members, or even to your peers.
So, even if you are facing a challenge that has nothing to do with GPO contracts, you may be able to leverage a GPO’s technology and large member network to connect with others who have faced similar challenges.
You are not facing the challenges of these uncertain times alone!
Have best practices of your own? Comment on this post with your ideas.