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Secrets to Saving With Your GPO
Find out how to get your money's worth.
Dan O'Connor
Publish Date: October 1, 2008

The Surgery Center of Centralia (Ill.) used to pay $22 per oxygen tank. Now it pays $6 per tank. All thanks to a happy coincidence that illustrates the first lesson of maximizing your GPO: know your GPO's contracts.

Your relationship with your GPO should be such that your rep alerts you of any changes to pricing and contracts, says Ann Geier, RN, MS, CNOR, CASC, a vice president of operations with ASCOA in Norwell, Mass.

What happened at the Surgery Center of Centralia was quite by accident. When Jason Fischer, RN, BSN, the ASC's facility director, asked his corporate office to review the new contract he'd negotiated with a local medical gas supplier, he was told to wait. It just so happens that their GPO had recently added a medical gas company at a much lower rate than the one Mr. Fischer had worked out.

The ASC, which hosts 80 to 100 cases a month, goes through about three oxygen tanks per week, which projects to a yearly savings of $2,300 a year. "It could be an enormous number in a bigger place," says Mr. Fischer. "Med gases never really cross my mind when I'm dealing with a GPO. I'm thinking implants, drugs and syringes. I'm amazed by how many things are contracted."

This brings us to our next lesson: If you have a GPO, order anything and everything you can through it — even, as Mr. Fischer was happy to discover, such not-so-obvious products as business supplies and cups, paper plates and paper towels.

"As we got excited about how much we saved with medical gas, we got to thinking about office supplies," he says. "We were able to get hand towels for the sink for 50 percent less by switching from an office-supply store to our GPO. I wish I'd discovered all our GPO could do for us last year — we could have saved a lot more money."

Be sure to avail yourself of all of the benefits that your GPO offers, not just the preferred pricing. From Web-based querying and product updates to benchmarking and utilization tracking, ensure you maximize all your GPO has to offer, says Gregory P. DeConciliis, PA-C, CASC, administrator of the Boston Out-Patient Surgical Suites in Waltham, Mass.

$630 or $253 for suture?
At The Surgery Center in Oxford, Ala., buying through a GPO is a no-brainer. Take custom shoulder arthroscopy packs, for example. They're $133 direct from the vendor and $98 through the GPO. The savings on 10-0 Prolene suture are even more dramatic: $630 direct from the vendor compared to $253 through the GPO. "As you can see, suture is one reason that I chose the GPO that we have," says Renea Goode, RN, BSN, the director of nursing. "There are significant savings with the GPO."

But how do you decide which GPO wins your facility's business? Ms. Goode offers a simple formula. Identify your 10 costliest and most frequently used surgical supplies — such items as sutures, procedure packs and implants. "Either analyze your materials management system or have your distributor run a material usage report," says Ms. Goode. Then find the most aggressive pricing for those supplies and choose that GPO. "You want to save the most money on your top items," she says. Another tip: Have your GPO do the legwork for you when it comes to gathering GPO pricing for your top-10 items.

Another way to make sure you're saving on your surgical supply budget as much as possible comes courtesy of Diane Lajoie, who purchases supplies for the Stony Point Surgery Center in Richmond, Va. Ms. Lajoie e-mailed her GPO rep a 30-page spreadsheet of every surgical supply her six-OR facility uses. "Cross-referencing like this is an easy way to ensure you're getting the best deal," says Ms. Lajoie. "It's particularly helpful if you're unsure if an item falls under a contract."

She had three goals. First, make sure Stony Point was buying all it could from its GPO. Second, identify those items that weren't on the GPO's contract so the facility could consider switching to a product that was under contract. And third, ensure that the ASC, which was part of a multi-hospital health system, was receiving the tier-level pricing to which it was entitled. "We should be piggybacking on [the health system's] contracts," she says. By the end of the two-month project, Ms. Lajoie estimates she identified more than $20,000 in savings.

Keep it pertinent
Don Bucher, a buyer for Oswego Hospital in Oswego, N.Y., says his GPO has some 4,000 contracts. "Who has the time to go through all of them?" he asks.

So instead of combing through thousands of contracts, Mr. Bucher and his GPO rep meet quarterly to review only those contracts that are pertinent to his hospital, where, he says, he buys "everything except food and drugs."

"Put the onus on the rep to bring in the listing of active contracts, with contract numbers, that you can access," says Mr. Bucher. "When the rep comes in, I put it on him as his duty to highlight or mark off which ones he thinks I should look at. This saves him time, saves me time and saves the hospital time and money because I jump into contracts as soon as they are available."

Otherwise, he says, he'd likely be unaware of valuable contracts. As an example, he says, Oswego was able to get in on a new IV pump fluid and tubing contract on the first day it was available because his rep knew the hospital would be interested.

Make sure you're loaded correctly
Instruct your materials manager to routinely audit your distributor and GPO pricing to make sure you're getting your contractual price, says Mary Ann Gellenbeck, RN, CNOR, CASC, the chief operating officer for Prexus Health in Cincinnati.

"I can't tell you how much I've recovered from my centers because they weren't getting contract prices," says Ms. Gellenbeck. "There was either a disconnect with the tier level communicated to the distributor or the distributor wasn't applying the discount to the account. It happens every single day."

GPO Tips from the Experts

  • When you set up the contract, create a spreadsheet or other reminder to alert yourself of expiration dates, says Ann Geier, RN, MS, CNOR, CASC, a vice president of operations with ASCOA.
  • If you order an item under contract with your GPO that your distributor doesn't routinely stock, you may incur an extra charge. "In such cases, you may do better by ordering directly from the manufacturer," says Carol Ruppal, RN, CNOR, CRCST, perioperative services manager at Barrett Hospital & HealthCare in Dillon, Mont.
  • Periodically check invoice pricing against your GPO pricing for accuracy, says Sharon D. Bowen, a vice president of operations at ASCOA.
  • If one of your most used vendors isn't on the GPO contract, ask for a "local" contract until it can sign on to the GPO, says Ms. Geier.
  • Sometimes it's better to go local. A common misconception of GPOs is that they'll always save you money. That's not always true, says Mary Ann Gellenbeck, RN, CNOR, CASC, the chief operating officer for Prexus Health in Cincinnati. Let's say you negotiate a straight local contract with a suture vendor that's not on your GPO's contract. You have to decide to switch to a competitive vendor your GPO contracts with, switch GPOs or negotiate a local contract with the vendor. You decide to contract directly with the vendor. A couple years later, your GPO contracts with the suture vendor. Thing is, it's not as good as your local contract. "The GPO will tell you that you're bound," says Ms. Gellenbeck, "but there's some leeway with the local contracts you negotiate."

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