Healthcare Providers Have Spoken: FTI Consulting’s 2nd Annual GPO Survey

FTI Consulting completed its second annual survey of supply chain personnel from healthcare organizations across the country. The objectives of the study were to determine the overall level of satisfaction with group purchasing organizations (GPOs), identify opportunities for improvement and assess trend data.

A few themes emerged during analysis of the results. First, large hospitals and health systems are starting to shift from the status quo by bidding out GPO services, starting their own affiliate model or increasing the number of local contracts they pursue. This shift is long overdue. Many large systems have the resources and built-in capabilities to create value for their organization and can market this value to other organizations without the assistance of a GPO.

Next, hospitals and systems both large and small are shifting their inventory strategy. The pandemic challenged the Just-in-Time (JIT) inventory trend, and many facilities will adjust to increase inventory on hand for items at risk of stockout. This creates new challenges, from inventory carrying costs to physical space constraints. Both only add to the tremendous financial pressure affecting the survey respondents.

Another major finding of the study was the high degree of dissatisfaction with the services and/or solutions that GPOs are providing hospitals and systems in the areas of physician preference items (PPI), purchased services and, to a lesser extent, advisory services. Dissatisfaction was higher in larger hospitals with greater than 250 beds. We can conclude that larger hospitals/health systems have built an infrastructure of experts to support the organization’s supply chain efforts, especially for these high-impact categories.

Purchased services and PPI require expert knowledge to implement results through clinician engagement, leadership support and strong negotiation skills. We often find that GPO price points are great starting points for negotiations. No matter the size of the organization, those who manage key categories of spend themselves yield better results.