GPOs cut supply costs for hospitals by 13%, study finds

Hospitals and health systems that use group purchasing organizations save 13.1 percent on supply-related buying costs compared to those that don't use GPOs, according to a new report commissioned by the Healthcare Supply Chain Association.

For the report, healthcare economists at DaVanzo & Associates analyzed National Health Expenditure data published by CMS and surveyed hospital and nursing home provider networks that used GPO services. Responses represented 530 facilities with a total business volume of $59.7 billion.

Four things to know:

1. Estimates suggest that 96 percent to 98 percent of hospitals use at least one GPO, which consolidates purchasing power across providers to help boost efficiency in the supply chain.

2. The report suggests that GPOs will save a health system up to $34.1 billion annually. In the next 10 years, GPOs are estimated to reduce healthcare spending by $456.6 billion.

3. GPOs are estimated to generate Medicare cost savings of $8.7 billion. In the next 10 years, GPOs are expected to generate $116.3 billion for Medicare.

4. "The new analysis of CMS health expenditure data confirms what virtually all of America's 7,000-plus hospitals already know: GPOs are critical supply chain partners that reduce costs for the entire healthcare system, allowing physicians to focus on their core, Khatereh Calleja, president and CEO of the Healthcare Supply Chain Association,   said in a news release.

Access the full report here.


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