“You've got to look at best demonstrated practices,” says Ed Jones, president and CEO of HealthTrust, a Brentwood, Tenn.-based GPO that is part of HCA's Parallon Business Solutions. “You've got to look at reducing clinical variability. You've got to look at streamlining your sourcing decisions.”
Nearly half of the hospital supply-chain executives who participated in Modern Healthcare's purchasing survey said they planned to increase their use of GPO contracts in 2013. Only 7.6% said they planned to decrease their use of GPO contracts.
“If a big system feels like their GPO can give them access to scale and aligns that scale to drive better value than they can do on their own, they will tend to work more with the GPO,” Jones says. “If the larger systems are in a position where their GPO is not as effective in that regard, they're probably going to do it on their own.”
Smaller health systems and hospitals are generally more inclined to work with GPOs and increase their spending with them to gain the scale and volume that they provide, Jones says. In other instances, contracts with higher commitment levels also are generating more interest because they often deliver better pricing, he adds.
Lahey Health says it plans to review its current GPO relationships with Novation, a GPO based in Irving, Texas, and MedAssets and then sign a contract in October with a single GPO that will handle at least $180 million of spending.
“It's a partner to help us meet our margin targets as we worry about declining reimbursements,” says Eric Berger, Lahey's vice president of supply chain. “We really need to look at expenses, so having a GPO partner will help us do that.”