The strategic advantage of GPOs for medical practices to navigate the age of inflation

The aftermath of the COVID-19 pandemic and years of inflationary price growth have left medical practices grappling with unprecedented financial challenges. The surge in operating expenses stands out, driven by increased demand for patient care and inflated costs of essential supplies. As practices strive to meet patient needs, finding cost-effective solutions has become imperative.

Several factors drive rising healthcare costs: supply chain disruptions have led to shortages and price hikes for medical supplies, while inflation has increased the cost of medical equipment, utilities and overhead. Additionally, staffing shortages have compelled practices to offer more competitive wages to attract and retain qualified professionals, placing further strain on financial officers’ work.

Group purchasing organizations (GPOs) emerge as a strategic partner for medical practices: A GPO leverages the collective buying power of its members to negotiate discounts with suppliers. By aggregating the purchasing volume of multiple practices, GPOs secure better pricing and terms on medical supplies, equipment, and services than individual practices could achieve on their own.

A Sept. 24, 2024, poll found that 72% of medical group leaders report using a GPO in their organizations, while 24% do not and 4% were unsure. The poll had 424 applicable responses.

The advantages of joining a GPO are multifaceted:

1. Cost savings: GPOs negotiate bulk purchase agreements, leading to significant discounts on various products. This reduction in supply costs directly alleviates the financial burden on practices.
2. Access to quality supplies: GPOs have established relationships with reputable suppliers, ensuring medical practices access high-quality products essential for patient care.
3. Streamlined procurement: GPOs simplify the purchasing process, saving time and administrative resources. This efficiency allows healthcare providers to focus more on patient care than supply management.
4. Flexibility and choice: Members of a GPO can choose from a broad portfolio of products and suppliers, enabling them to select options that best meet their specific needs and standards.
5. Staying competitive: By reducing operational costs, practices can allocate resources to other critical areas, such as adopting new technologies or expanding services, helping them maintain a competitive edge in the healthcare market.

Did you know?

MGMA members have a powerful, exclusive benefit: MGMA BestPrice.

• MGMA BestPrice is a partner of HealthTrust GPO, one of the nation’s most powerful group purchasing organizations.
• The extraordinary leverage of MGMA BestPrice allows MGMA members to command lower rates on medical and non-medical goods while retaining current suppliers.
• MGMA BestPrice saved MGMA members more than $14 million last year alone.

Check out this member benefit today and use the savings calculator to understand how your organization can start saving today.

Conclusion

Leveraging the benefits of a GPO can transform medical practices by providing strategic solutions to combat rising expenses. This enables them to maintain high-quality patient care while achieving greater operational efficiency and sustainability.