No doubt about it, the group purchasing organization is the key to low prices on surgery center supplies and equipment. GPOs negotiate our vendor contracts and keep us apprised of new products and technologies.

Yet the distributor is another key player. It helps surgical centers keep money in the bank by delivering goods at just the right time and in just the right amount to keep supply levels at an efficient, no-waste shelf life of 30 days or fewer. This should be every successful facility's standard practice.

When your GPO and distributor work together, your bottom line benefits. Here's the optimal partnership:

• Your GPO negotiates contracts for products.
• Then your GPO works with your distributor to load product pricing for your order into the distributor's database. This assures accurate billing for the product you ordered at the price you were quoted.
• Your GPO then tracks the products youorder on contract every month.
• The more products you order on contract, the better it is for future success, since contracts are negotiated on the basis of volume purchased in the previous year.
• The distributor works with the GPO to ensure that pricing is current and products the center needs are on contract.

You'd be surprised at how many administrators don't understand the relationship between GPOs and distributors. As you can see, in the sidebar at right, they each have very different but complimentary roles and responsibilities in the supply chain.

In search of the right distributor
It's critical to find a distributor that will work for you. To conduct a successful search, ask the following questions:

• Does this distributor have a relationship with my GPO?
• Does the distributor have a national presence?
• Is the distributor's sales force dedicated to serving surgery centers?
• Is the distributor's sales representative knowledgeable about the surgery center business?
• Does the sales representative have sound product knowledge about the goods a surgical facility requires?
• How often does the distributor deliver?
• Is the distributor's warehouse close to the facility
• Does the distributor charge a delivery fee?
• Is the distributor willing to break boxes and cases in order to sell "eaches"?
• What is the timeline for loading your GPO contract information into the distributor's database?

When interviewing potential distributors, ask for references in your geographic area. Check out those client references by asking the questions cited above. If the clients' and distributors' answers align, you're on your way to a sound choice.

Your role
By far, you have the strongest chance of realizing success with your distributor if you share the following information:

• frequency of product orders,
• quantity ordered of commonly used products,
• GPO contract pricing for each product (obtain document from GPO), and
• products you infrequently order but need the distributor to keep in stock.

When you open a facility, your distributor should have a list of all products needed. This list also will help you in preparing your initial purchase orders. During the first 90 days of center operation, your distributor also should assist you in adding or deleting products by not charging restocking fees.

Great expectations
Here is a list of reasonable expectations a distributor should meet to successfully serve you:

• Sales representative calls on you at least monthly, and weekly if your center is a start-up.
• Back-order reports are easy to obtain and alternative products are offered.
• Daily order deadline is no earlier than 2 p.m.
• Deliveries are made at least twice a week.
• There is a process that lets you obtain products at the last minute, with minimal or no delivery fee.
• Electronic ordering capability is available.
• The distributor's software integrates with your software and that of your GPO.

Meeting or exceeding expectations
In the competitive medical product distribution industry, winning distributors deliver more valuable services than many of us realize. A distributor with advanced knowledge of technology and customer service will offer its clients:

• product usage reports,
• software that integrates with yours for uploading product listings and pricing,
• GPO contract usage reports,
• bar coding/inventory programs,
• CEU-granting educational programs,
• business-intelligent software,
• value-added services such as scope repairs and equipment maintenance, and
• commitment to a true partnership by providing business reviews at least once per quarter.

It has to be a partnership
Controlling supply costs - the second largest expense in a surgical facility - requires a distributor that's also a business partner. At best, you and the distributor must collaborate in understanding product purchases that are in the best interest of the center. You must be able to discuss what needs to be improved in your facility's purchasing process so that you can decrease costs and get better service.

In addition, discuss what works and doesn't work with the distributor's processes, as well as changes that could help your facility meet its goals. Review GPO contract usage reports at least quarterly. You can improve cost per case by improving contract usage and working with the distributor to keep product delivery aligned with center goals.

Communication and education
After completing a business review with your distributor, consider requesting that your GPO obtain contracts with vendors with whom your distributor works, but your GPO currently doesn't. As always, the GPO is responsible for meeting your center's contract requirements and can only do so when you communicate your needs.

Always double-check pricing to ensure you are being billed according to contract. Do this by identifying your high-volume vendors and randomly selecting invoices to compare contract pricing with the invoiced amount. Be sure to notify the vendor or distributor of any discrepancies.

Another valuable process to install to ensure correct billing is continuous audits. Your center's purchasing technician is responsible for checking invoice pricing against purchase-order pricing and the price recorded in the electronic inventory system. Prices should always match. These audits enable immediate resolution of discrepancies.

When you understand how to work with the two key players in purchasing product, you're able to control your facility's second largest expense. Ultimately, you'll find good communication leads to working well with your GPO and distributor in a partnership that benefits all.