New Survey from the American Hospital Association Shows Hospitals Rely on GPOs to Reduce Costs & Ensure Patient Access to Life-Saving Products

The Healthcare Supply Chain Association (HSCA) and its group purchasing organization (GPO) members are applauding the release of a new independent survey from the American Hospital Association (AHA) and the Association for Healthcare Resources & Materials Management (AHRMM) which found that hospitals rely on GPOs to reduce costs, that hospitals are overwhelmingly satisfied with their GPOs, and that GPOs increasingly offer services beyond traditional chain management to help meet hospital needs.

The survey, whose lead author is a professor from the Department of Health Care Management at The Wharton School of the University of Pennsylvania, polled more than 1,200 hospital supply chain executives for their perspectives on GPOs and asked them to evaluate their GPOs based on a series of performance and utilization measures.

“The American Hospital Association survey reaffirms that hospitals rely on their GPO partners to be critical cost-savings engines and to help source life-saving medical products for the patients they serve. Hospital purchasing executives are sophisticated shoppers in a competitive market and they continually turn to GPOs to help deliver the best products at the best value,” said HSCA President Curtis Rooney. “Hospitals are facing mounting pressure to bend the healthcare cost curve. Every GPO offers a unique value proposition and competes with other GPOs for hospital business, to further reduce hospital costs and to help meet evolving hospital needs.”

“This important report shows GPOs provide a valuable service for the hospital field,” said AHA Executive Vice President Rick Pollack. “By helping them manage supply costs, hospitals utilize GPOs as a very important tool in their supply chain toolbox.”

Top-line findings of the AHA/AHRMM survey include:

  • Hospitals are overwhelmingly satisfied with their GPOs. Approximately 90 percent of all hospital respondents reported being satisfied or very satisfied with their national GPO; 
  • GPOs reduce hospital costs. 88 percent of hospital respondents agreed or strongly agreed that GPOs reduced costs through lower product prices;
  • The role of GPOs is increasing. Two-thirds of respondents agreed or strongly agreed that the role and impact of their national GPOs has grown over the past five years;
  • Hospital satisfaction has translated to long-term GPO relationships. In 2014, the average tenure of a hospital with its national GPO is roughly 11 years, which is an increase over the 2005 average of roughly 9 years;
  • GPOs are expanding services to meet hospital needs. Although hospitals continue to lean heavily on GPOs for producing cost savings, GPOs have also expanded their offerings to help hospitals with services beyond supply chain management, including clinical improvement and value analysis activities. 
“In terms of performance, the national GPO succeeds most in obtaining price discounts and achieving savings via lower product prices. Such savings come about through lowest market pricing, contract standardization, and provision of the market pricing point. They also contribute to savings via rebated administrative fees and information technology,” said the AHA report authors.

To read the full AHA/AHRMM report, “Hospital Supply Chain Executives’ Perspectives on Group Purchasing: Results from a 2014 National Survey,” click here.

To read a literature review evaluating the performance of GPOs, click here

To read the full AHA survey press release, click here.