SMART SHOPPER Ask the right questions of a GPO at the start to ensure the most long-term value from your contract.

An affiliation with a group purchasing organization makes good business sense, right? After all, being part of a GPO gives you the clout to buy supplies at much more palatable prices than you could find on your own. That is, if you find the right GPO.

For all the extra purchasing power that a GPO can grant you, entering an inflexible contract with exorbitant fees and limited freedom to buy what you need essentially defeats the purpose: to save your surgical facility money. According to the GPO insiders we talked to, here are the 7 questions you should ask a GPO up front to avoid such a fate, and to determine whether the GPO is truly focused on your facility's best financial interests.

1. Is there a monthly fee?
There shouldn't be. If there is, look elsewhere. Vendors pay GPOs a fee for every dollar you spend with them. GPOs make their profits based on the amount of money you spend on each vendor's contract, and shouldn't be charging you a monthly rate on top of the membership fee you've already paid.

2. Can I see a list of your vendors?
You'll want to know if the vendors you currently work with are among the group purchasing organization's contract vendors. Ask for a list of current contracted vendors, and compare it to your vendor list. You should see a good percentage of the same names on both lists. If not, find out if the GPO will negotiate in order to add specific vendors.

3. Do you offer programs to reduce supply expenses?
Some GPOs offer special programs with sourcing strategies that lead to pricing based on a percentage of commitment versus volume. This creates low pricing that's attainable for almost any surgery center. Group buying programs and other periodic sourcing events may offer additional savings on products like medical devices and capital equipment. Ask how many contracts have pricing that's differentiated by class-of-trade. For example, determine if pricing derived from acute care pre-committed sourcing programs is also available as standard pricing to ambulatory surgery center clients.

4. Do you offer multiple product and service categories?
GPOs with a portfolio that spans multiple product and service categories offer a tremendous advantage to an ASC, from medical supplies like IVs, surgical instruments and anesthesia equipment to a range of pharmaceuticals and non-medical supplies and services, such as capital equipment, financial services and cell phones and services.

These GPOs are able to leverage their purchasing power to negotiate contracts specifically designed for and scalable to surgery centers, often including subspecialties such as ENT or ophthalmology, for instance. This means your surgery center now has access to the same pricing as acute care facilities. And fixed pricing for a specified term means you don't have to worry about unplanned price increases. Which should lead you to your next question …

5. Will pricing fluctuate during the terms of our agreement?
You need to know when and if prices may change. Ideally, prices should remain firm for the duration of your agreement. When you know and agree to prices up front, you can better forecast expenses and manage costs. And in our current healthcare environment, where facilities like yours face a potential increase in supply expense resulting from larger patient loads, predictable, "true" costs help to manage the overall cost of care delivery.

6. How flexible are your contracts?
There will be times during the term of your agreement when a surgeon wants to try an emerging technology or a product — say, a scope, instrument or implant — that's not typically covered under your GPO agreement. As such, it's key that your GPO provides a contracting strategy that includes continuous portfolio refreshment, monitoring of new technologies and custom contracting capabilities that supplement the GPO's base portfolio. Be sure to inquire about how the GPO awards contracts to suppliers, and understand the voice that your facility will have in the award process. While all GPOs regularly negotiate contracts on behalf of members, many GPO contracts include very strict terms and conditions. Don't get swayed by vendors offering sideline price matches that may be limited by terms or conditions that don't align with your organization's goals and objectives. Beware of unknown vendors offering "substantial" savings or rebates that may be unattainable or even non-existent.

7. What value-added services can you provide?
Some GPOs offer value-adds such as an electronic contract catalog or tools that provide visibility into volume reports. With access to a searchable web-based catalog, you can instantly view terms and conditions, contract details and pricing at any time. For example, you can obtain facility price with or without distributor markup, measure price compliance and uncover new savings in areas such as physician preference items.

A GPO may also be able to provide greater visibility into spending. Even if you have strong controls already in place to track how supply budgets are spent, a GPO's spending visibility program can help track changes and prevent overpayment. Spending visibility will also help you verify that contracted items are being purchased, spending is at contracted rates and agreed-to prices are tracked. GPO experts should be able to assist you in implementing and adopting such a program to help you identify more opportunities to save money and to continue to achieve savings over time.