Health systems are asking more of their group purchasing organizations as supply chain leaders look beyond negotiated pricing toward broader cost, quality and resilience goals.
Five leaders told Becker’s their GPO strategies have evolved over the last several years to connect purchasing decisions with clinical outcomes, improve supply assurance and get more value from data, technology and strategic partnerships.
At Springfield, Ill.-based Hospital Sisters Health System, that shift has meant moving away from viewing a GPO primarily as a pricing tool. The health system is combining supply cost data available through its GPOs with quality and outcomes information from clinical systems to evaluate performance at the procedural level.
“Pricing alone from GPOs solves a cost problem temporarily,” Nalin Kulasekara, system vice president of ancillary operations and supply chain management, told Becker’s. “Sustained gains can be achieved by utilizing GPOs to drive best quality care at the lowest cost.”
The system is also using GPO benchmarking capabilities to identify opportunities to move its cost and quality metrics toward the top quartile or decile of performance.
A similar focus on broader performance is shaping GPO utilization at Miami-based Jackson Health System. Rosa Costanzo, senior vice president and chief supply chain and procurement officer, said the system’s strategy is centered on “overall performance improvement and lower operational and clinical costs that improve outcomes.”
But cost and quality are only part of the equation. Ms. Costanzo said supply assurance has become critical to GPO activity and contract negotiations, reflecting a healthcare supply chain environment in which availability can be as important as price.
Other systems are expanding how deeply GPO capabilities reach into their spending. New York City-based Memorial Sloan Kettering Cancer Center has rebuilt its spend management governance program over the past 18 months without adding internal resources to manage it, according to Aaron Tappan, vice president of supply chain and sustainability.
One piece of that strategy is leveraging GPO capabilities across both direct and indirect spend categories, expanding the organization’s reach and influence while pursuing additional savings and a more aggressive fee-share percentage.
The expectations placed on GPOs themselves are also changing. Tracy Cleveland, vice president of supply chain at Munson Healthcare in Traverse City, Mich., and president of the Northern Michigan Supply Alliance, said that although the fundamentals of the model have remained stable, members increasingly expect technology and customer support that can help manage purchased services, benchmark performance, optimize contracts and tiers, and identify when products are being purchased through the wrong channels.
Health systems also need their GPO partners to respond quickly when geopolitical or other global events threaten existing agreements, he said.
“Regular, sustained communication is a must,” Mr. Cleveland said.
For Chicago-based CommonSpirit Health, the evolution is also changing the structure of its GPO relationships. The health system has been increasing its reliance on Edgewise, its wholly owned GPO, while reconsidering what it needs from outside partners.
CommonSpirit is “redefining the scope of its third-party partnerships to focus on more strategic, rather than purely transactional, relationships,” Shawna Parker, director of operations and logistics, told Becker’s.
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