Guest Columns

How to make GPOs work for you

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John Sganga
John Sganga
Long-term care facilities are no different than any other business in that they are searching for ways to make their dollars go further while improving their profit margins. But with revenue less of a sure thing than ever, how do you tackle this challenge?

One solution right at your fingertips will deliver savings without disrupting the way you currently do business. A comprehensive review of your facility's expenses and supply chain by a group purchasing organization (GPO) is the perfect way to improve your bottom line.

While GPOs have been a staple of the acute care provider community for many years—more than 90% of America's hospitals use them—they remain a largely untapped resource for long-term care facilities. And make no mistake: long-term care executives that have taken the “GPO plunge” have quickly learned how essential supply chain management is to their facilities' overall financial health.

Here's how to get started.

Compare GPOs

I advise LTC executives to shop around. Don't trust a GPO executive who discourages you from comparing different GPOs and seeing who offers the best value for a given product. If you are currently engaged with only one GPO, I guarantee that doing some comparison shopping will result in added savings for your facility. Indeed, it's often wise to use multiple GPOs. And be sure to work with a GPO that goes the extra mile to find the best contracts for the products you need. In short, make them earn your business.

Test the Waters

For those not fully convinced that a GPO is right for them, my advice is to simply test the waters. Most GPOs will offer a “no strings attached” review of your entire supply chain, or focus on targeted areas in need of greater efficiency. You'll soon discover that perhaps the most appealing element of group purchasing is its flexibility. You can work with GPOs as little or as much as your needs require. You will order your supplies the same way you do now, but it will cost you considerably less to do so.

See What Goods and Services GPOs Are Offering

Long-term care facilities engaging with GPOs for the first time are always surprised at the breadth and scope of the products and services available through GPO contracts. A good GPO will offer pharmaceuticals and vaccines, food service distribution and equipment, laboratory services, office and information technology supplies, and everything in between. Most important, GPOs can help you purchase them for less money than you're paying right now—sometimes dramatically less.

Engage and Save

There was a time when long-term care facilities could pay top dollar for products and services and still enjoy comfortable profits, but those days are long gone. In 2012, as costs increasingly outpace profits, exploring the supply chain savings that GPOs offer could well be the smartest business decision you'll make all year.

John Sganga is the president and CEO of Innovatix and Essensa.

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Guest columns are written by long-term care industry experts, ranging from academics and thought leaders to administrators and CEOs.

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