GPO for Articulate Comm

Charting Your Course to Optimal GPO and IDN
Computer-based Training
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Confidential. For Internal Use Only
Introduction/ Objectives
Charting Your Course to Optimal GPO and IDN Relationships
Upon completion of this section, you should be able to:
Understand the role of GPOs and IDNs in the contracting process
Understand Surgical Solutions process to obtain a GPO agreement
Be able to decipher a GPO agreement based on Quick Facts
Know where to locate GPO agreement information
Understand where to obtain GPO information about your accounts
The Basics
New pressures have changed the GPO contracting landscape.
Government/Medicare costs escalating
Hospitals need to reduce costs
Influx of Low Cost suppliers
Reinventing themselves into more of
a consultants role
Separating categories into smaller product groups
Most awards are multi/dual source awards versus sole
Did you know…
Today, virtually every hospital in the U.S. belongs to at least one
GPO. More than 70% of all hospital purchases are made
through GPO contracts, and GPOs contract for purchases with
an annual value in the range of $150 billion
Why Do GPOs Exist?
GPO agreements enable ABC Company access to their members
Access enables Field Sales teams to convert, standardize, and consolidate vendors to reach
GPO voting members in both committed and non-committed accounts
Penetration and presence in accounts allow ABC Company to introduce new technologies that build leverage and disrupt the
Pricing integrity and profitability are maintained for GPO members of like size and compliance ability
GPO Defined
GPO (Group Purchasing Organization)
Group purchasing organizations (GPOs) were created to help hospitals and other providers to pool their purchasing power to secure
significant discounts on virtually all medical and other hospital supplies.
Negotiates pricing/contracts on behalf of its members with the objective of lowering overall costs
Hospital pays GPO an annual fee to negotiate on their behalf
Manufacturers pay GPO’s a fee to market their agreements to the hospitals
and drive compliance
Large IDNs and Systems typically are the owners of the GPOs
As the GPO’s membership expands, its ability to leverage purchasing power decreases
Today’s GPO Landscape
GPOs are enabling their members to establish geographical buying groups
Embracing coalitions and collaboratives which are driving standardization
Providing greater transparency to our pricing via intranet tools
Educating Integrated Healthcare Networks (IHNs) on best practices .that focus on enhanced collaboration between
physicians and supply chain
Health logo
Today’s GPO Landscape
GPOs are trying to reinvent themselves to ensure they bring
value to their memberships
Embracing coalitions and collaboratives which are driving standardization
Providing greater transparency to our pricing via intranet tools
Educating IHNs on best practices .that focus on enhanced collaboration between physicians and supply chain
Integrated Delivery Network (IDN)
A network of facilities and providers working together
to offer a continuum of care to a specific market or
geographic area (also referred to IHN-integrated
healthcare network)
Developed in the early 1980s, IDNs emerged to address
common concerns like capitation, excess capacity,
decreased margins, and complaints from patients
regarding access
Frequently, the GPO contracted price is seen as the
starting point for IDN/vendor negotiations
Self contracting by IDN;s is on
the rise: this trend started with commodities and is now
picking up speed with physician preference items
Includes many types of associations across the continuum
of care and one network may include a short- and longterm hospital, HMO, PHO, PPO, home health agency, and
hospice services.
Where do I put
Kaiser, Tenet, Partners Health System, IHC, UPMC, Northshore/LIJ Health
For example: Dignity Health is also part of Catholic Care Group (CCG – 1 of 6
IDNs) and is also voting members and shareholders of Premier
Why are GPO’s successful?
Lower total purchasing cost for small and large Providers*
Provide supply chain support to Provider through contract negotiation, value analysis
and other additional services
Replaces some hospital full time employees (FTEs)
Providing consultant type roles for cost reduction
* Providers defined as hospital, system, coalition, alliance
Insert business to
Business Image –
helping somebody
GPO Segmentation
The various types of GPO’s, IDNs and other purchasing entities
GPO Type
Manage outsourced supply chain
Own/manage/lease members
Highest compliance to agreements- “mandate”
Members own GPO (equity owners, shareholders)
High to moderate compliance- “expect”
Members pay to participate
Moderate to low compliance- “voluntary”
A GPO Agreement
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Insert picture
of Quickfacts
Local Agreements
Used when the volume and compliance of an IDN, Purchasing Coalition or Hospital exceeds the highest tier offered on a
GPO contract that they may request special pricing that is better than the agreement. In these cases, an local agreement is
negotiated directly between ABC Company and the IDN, Purchasing Coalition or Hospital. These agreements typically are
an extension of the GPO agreements and we pay the same administrative fees to the GPO. In rare instances we may pay
fees to the IDN, Purchasing Coalition or Hospital. Please consult your National accounts team before entering into any
local agreements. Fees range from 1-3% depending on whether contract is sole, dual or multi-source.
These agreements will be driven by the Strategic Accounts Team or Sales Leadership.
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Surgical Solution Current GPO Agreements
Can be
into earlier
Surgical Solutions currently has 42 Active GPO agreements
slides or did
Approximately 75% of our business runs thru a GPO agreement
you know
Number of Agreements by GPO
AST Only
GPO Agreements by Business Unit
SuS Only
Leveraging the GPO Agreements
Key Representative Actions
• Monitor Compliance to grow market share or take revenue
• Introduce New products
• Ensure the safe and efficacious use of our portfolio
Key Resources
Use SFDC to identify GPO
– Go into SFDC and go to the 'Reports' section and search for the following report.
S2 Account List with Primary GPO and locate your account
• Offer Development Tools
The seller/RM should put a work request in via Business Analysis Tool (BAT).
• They can then run up to three different “what if” pricing scenarios, by themselves, on current
• If they have competitive usage in an excel format, they would then send that into their Offer
Development Analyst along with the BAT work #.
• They would then get an analysis and Executive review from Offer Development between 2-5 day,
maybe sooner.
• Pulse Connect GPO site (https://pulseconnect.ABC
Marketplace Changes – Procurement Strategies
Recent Marketplace Trends: Third Party E-Sourcing
There’s been an increase in hospitals self-contracting as they look to revisit their capabilities
and approaches to improve their overall supply cost budget. This is not just focused on
price, but total cost. Hospitals and Health Systems are hiring sourcing consultants to handle
the sourcing and live bid process of many expense categories to create a more transparent
and flexible marketplace. The process is all done through a hospital and supplier online
This on-line negotiation and bidding platform provides the flexibility to source nearly every
expense category in a hospital, allowing clients to negotiate contracts during a live-bid
. suppliers.
process. This ensures the best terms
value too
from current
Reverse auctions is another e-procurement strategy used by purchasing and supply
management organizations to reduce spending as part of strategic sourcing and other supply
management activities.
Can call this out in blurb:
Third Party Sourcing: Benefits to hospitals: outside party to manage the process with vendors
and hospital stakeholders to help increase savings for hospitals
Charting Your Course to Maximize GPO and IDN Contracts
Congratulations. You have reached the end of this module.
Thank you for investing the time to understand how GPO…….
can positively impact your success at ABC Company.
The following questions were developed to test your understanding of the material just covered.
You are expected to get a score of 90% or higher.

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