The provocative sub-headline “Health systems are reclaiming the procurement process, often at the expense of GPO’s” introduces Modern Healthcare readers to the latest in a series of articles on industry disruption.
Featuring three organizations in the OpenMarkets Community, Modern Healthcare is taking a close look at the value GPO’s provide to both suppliers and providers. Rob Austin, associate director at consultancy Navigant, offers the stance “GPOs are really dinosaurs in the industry,” and “they are working to change, but the whole model is based on aggregated volume - they must change to survive.”
OpenMarkets was founded with a mission to improve the way healthcare equipment is bought and sold. With software allowing for providers to better understand what they need to buy and when, OpenMarkets allows suppliers and providers to engage more efficiently on transactions. This complements the work of many progressive GPOs, such as TPC, while leaving a few provider organizations questioning the benefits they get from their national GPO.
From the article:
Maury Regional Health uses its GPO, Vizient, more for strategic consulting services than purchasing. The independent Columbia, Tenn.-based provider saved about 30% off the GPO price when it purchased six CT scanners through OpenMarkets, a software-driven marketplace for healthcare equipment used by hundreds of hospitals and suppliers, said Roger Larkin, Maury Regional’s director of supply chain.
Lisa Laser, an emerging manufacturer of high-quality holmium lasers, invests more into R&D and customer service than sales and marketing. This has led them away from a traditional GPO contractual relationship. Instead, Lisa Laser takes strides to contract directly with providers. OpenMarkets is a core part of this strategy for Lisa Laser.
Medical-device manufacturer Lisa Laser USA decided to contract directly with manufacturers after its relationship with a GPO yielded minimal results. While GPOs provide a good storefront to browse products, they don’t adequately convey the uniqueness of the company’s relatively newer products that fall outside the “mainstream,” said Peter Allen, CEO of Lisa Laser. There is also a lot of red tape in dealing with a GPO, he said. “From what we’ve heard, surgeons know what they want but hospitals have such a tight relationship with GPOs that they’re almost forced down a different path.”
Philips Healthcare, another Active Supplier in the OpenMarkets Community, is highlighted by Modern Healthcare for thinking differently about how they work with strategic provider partners.
There is an emerging group of customers that want to have risk-sharing contracts and closer vendor relationships to help bend the cost curve and improve outcomes, especially as more organizations form integrated delivery networks, said Joe Robinson, Philips’ senior vice president of health systems solutions.
Philips Healthcare, Lisa Laser and Maury Regional Health embody the OpenMarkets mission in their drive to remove waste from the healthcare supply chain. Our belief is that GPO’s are ultimately a part of the solution and will continue to evolve their offerings to improve how data is used to support efficient collaboration.