Every dollar you save on purchasing supplies goes directly to your facility's bottom line. Working with a GPO will save you at least 5 percent to 10 percent on your purchase orders - saving just 5 percent in supply purchases can increase profits by $37,000 for the average-sized center and by up to $100,000 for a large, multispecialty center. So if you're not working with a GPO, perhaps you should be. And if you're already using a GPO, then you should be taking advantage of all the benefits in both supply costs and staff efficiency it presents. Here's what you need to know to get all you can out of your GPO.

1. Take a history lesson
Some GPOs have historically focused on ASCs while others have concentrated on hospitals. However, due to the rapid growth in the outpatient surgery field, most GPOs have expanded into the ASC market. My preference would be to select a GPO that derives most of its business from the facilities similar to yours, be they hospitals or ASCs. That way, the representatives will be more knowledgeable about how your type of facility operates and the supplies you use, and will be accessible to you.

2. Understand contracts
GPOs differ in contracting philosophies. Some give you the option to use their contracts, while others mandate that you use their contracts only. Some GPOs will contract with only one supplier and others with several for a particular item. You need to make sure the GPO you choose has most of the supplies you want on contract if it presents a mandatory sole-source program. A mature center with stable volume that has been able to standardize its supplies over time can save money in this type of arrangement. However, a center that has just opened and is in the process of attracting new physicians will probably want to have more purchasing flexibility so that it can give new docs the supplies they want. You don't want supply issues to delay a surgeon from starting at your center. A voluntary/multi-source philosophy would be better in this case.

3. Beware of substitutes
A problem administrators frequently encounter: The GPO doesn't have the supplies you use on contract, and it wants to substitute for these items. Look closely at these substitutions to ensure the medical staff will use them and that the unit quantities compare. You also need to make sure the quoted custom packs and trays are equivalent to what you currently use.

4. Develop a relationship
After you select a GPO, develop a good working relationship with its representatives, who can help you understand all the programs offered. The GPO is your purchasing advocate; it has programs designed to determine what you're currently buying to help you decide which products to standardize in your purchase order. GPOs are also responsible for monitoring your purchases to ensure that you're getting the correct pricing from suppliers.

All too often, management teams claim they're too busy to take advantage of these programs; but at the same time, especially in the ASC setting, staff will spend time shopping for supplies directly from vendors without looking at the GPO contracts first. And that's not doing anyone any good.

5. Let the GPO work for you
GPOs are responsible for resolving any supplier issues you might have. The GPO has a lot more influence with the suppliers then a single surgical facility, and it is the company's contractual obligation to have your best interests in mind. You should never hesitate to call the GPO rep for help on supply-related issues.

6. Don't overvalue pricing
Pricing is only one consideration when choosing a GPO. The initial pricing differential between GPOs is usually less than 3 percent in the beginning, and that can be easily made up by the ancillary services they offer and the attention they give your facility.

7. Prioritize your needs
You don't need to look at all your supplies, just the top 75 to 100 items you use, which usually represent more than 70 percent of your purchasing dollars. If you're not able to save money on these items, then you probably won't save anything on the remaining supplies.

8. Make allowances
Avoid judging the GPO on just one or even several supplies that can be bought for less outside the GPO contracts. A staff member will often find better pricing on a single supply and lose confidence in the cost effectiveness of the GPO. These single-supply savings can send facility administrators off looking for deals on many other supplies.

It's important to remember that your GPO cost savings result from buying a bundle of supplies. To have an employee shopping outside of the GPO contract is an expensive use of time and should only be done if great savings can be achieved.

The bottom line
The average ASC spent more than $750,000 on surgical supplies in 2002 - or about 19 percent of revenue, according to a survey conducted in 2003 by the Medical Group Management Association. For high-volume, multispecialty centers, supply costs can easily run more than $2 million per year. Of the many methods to drive down supply costs, one stands above the rest: contracting with the right suppliers. While such strategies as benchmarking case costs against industry averages and setting minimum inventory reorder levels deserve consideration, selecting and managing the right GPO will dramatically improve your supply costs and put you on the road to savings.