GPOs can cut supply expense by at least 18%
December 1, 2001 5 minutes read
GPOs can cut supply expense by at least 18%
Pick organization that focuses on SDS programs
Finding the right fit is important when shopping for clothes or shoes. It also is important when looking for a group purchasing organization (GPO), according to experts interviewed by Same-Day Surgery. GPOs and their distributors have niches in which they specialize, points out Greg Eisele, FACHE, MHA, president and chief executive officer of MD Resources, a Fresno, CA-based health care consulting firm that offers a variety of services, including advice on managing purchasing and other financial activities.
While the primary advantage of using a GPO is cost-savings, a same-day surgery program should look for an organization that focuses on same-day surgery programs to get the best prices and the best customer service, he says. A GPO negotiates on behalf of a large group of same-day surgery programs, which means the members qualify for much larger discounts than they can on their own, says Eisele.
Finding the best organization for your needs
Once you’ve decided to participate in a GPO, meet with several groups to find the best for your program, he suggests. (See "Advice on locating group purchasing organizations" in this issue.) Eisele says there are several questions to ask as you evaluate different groups and their ability to meet your needs:
• Who does the GPO serve?
Finding out what type of health care clients make up the majority of a GPO’s clientele is the first step to figuring out which organization can best help you, says Eisele. "If a GPO is hospital-oriented, a same-day surgery program will be one of the smaller members and won’t command the same attention," he points out.
Another reason to check out the GPO’s orientation is to make sure it addresses the specific needs of your program, says Brent Christensen, vice president of national accounts for Amerinet, a St. Louis-based GPO. "Be sure you ask to see the GPO’s contract portfolio, and take a close look at the items included," he says.
Pay careful attention to the availability and price of the specialty items you may need for your program, he recommends.
"Most same-day surgery programs can expect a savings of 18%-22% over what they have been spending," says Christensen.
• What items do they offer?
While a same-day surgery program that focuses on one specialty such as ophthalmology or plastic surgery will have a very specific list of needs, multispecialty programs need to make sure the GPO can meet all of their needs, says Leanne Bales, RN, CNOR, administrator of the Effingham (IL) Ambulatory Surgery Center.
Checking your supply list
For this reason, you want to check out a variety of GPOs, even those who supply a number of hospitals since your supply list may resemble that of a small hospital that would benefit from the discounts given to the larger members, Bales adds. "Be prepared with your volume projections for each type of procedure as well as your supply lists," she suggests. "Your volume will affect pricing, and it’s easier to have your supply list in front of you rather than rely on memory as you review the GPO’s item list."
Also, look at the manufacturer of the items, says Bales. If a GPO offers sponges from only one manufacturer, and it is not a sponge you normally use, ask if it is willing to offer alternative sources, she suggests.
• Where is the distributor?
Location of her distributor was important to Bales. "The GPO in which I participate has distributors in Peoria, St. Louis, and Chicago," she points out. "This means that my supplies come by truck and can get to me 99% of the time with no delay," she says.
Some GPOs will use a centralized distribution system in which the supplies are shipped from a few locations only, says Bales. "This can work for some programs, depending on the distributor’s location and how the supplies are transported," she admits. The most important thing is to find out up front how the distribution works, she adds. Check with other GPO members to see if deliveries are timely, suggest Eisele. "You should expect a normal turnaround time of 24-48 hours," he adds.
• How are orders placed?
A variety of methods are available from different GPOs, so pick the one that fits your program, says Christensen. While e-commerce is important to some clients, not all same-day surgery programs are set up to handle on-line ordering. (For more information about e-commerce and outpatient surgery, see Same-Day Surgery, June 2001, p. 61.) Pick the GPO that offers what you need, he suggests. "Even if you only want to use the e-commerce option, be sure that there is a live customer service option available when you have a problem," he recommends.
Also find out if your GPO has a local field representative who is available to answer your questions or help you deal with problems, suggests Bales. In addition to the face-to-face communication with the field representative, find out if the GPO sends out notices of special pricing for certain items during the year, she adds. "This type of communication is important as we all juggle our capital equipment budgets," she points out.
The last tip Eisele has for same-day surgery managers is a caution. "Be aware of hidden costs," he warns. These are not costs the GPO slips in without notifying you, but they are higher prices you pay because you aren’t reviewing your invoices carefully, Eisele says. "Everyone knows to compare the quantity received with the quantity ordered, but have someone on your staff look at the prices charged as compared to your contract price, he suggests. The difference can be significant, Eisele points out.
In addition to having your staff be on the look out for these differences, find out if the GPO will help you monitor for price errors, he suggests. "In some cases, you will have a 25%-35% difference in price," he says. "This represents a lot of money if it happens consistently."
Sources
For more information about group purchasing contracts, contact:
• Greg Eisele, MD Resources, 723 E. Locust Ave., Suite 117, Fresno, CA 93720. Telephone: (559) 447-4488. Fax: (559) 447-4480. E-mail: [email protected].
• Brent Christensen, Vice President of National Accounts, Amerinet, 2060 Craigshire Road, St. Louis, MO 63146. Telephone: (800) 388-2638 or (312) 542-1926. Web: www.amerinet.org.
• Leanne Bales, RN, CNOR, Administrator, Effingham Ambulatory Surgery Center, 904 W. Temple Ave., Effingham, IL 62401. Telephone: (217) 342-1234. E-mail: [email protected].
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