Transforming Healthcare: The Supply Chain Management Innovations

Transforming Healthcare: The Supply Chain Management Innovations


Group Purchasing Organizations (GPOs) plays a vital part in healthcare’s supply chain management system. Supply Chain Management boasts incredible revenue generation helping healthcare industry to progress beyond the expectations, as many of them have evolved and diversified their services highly recognizable looking for the benefits of the patients.

GPOs work on the referral of business to healthcare’s suppliers and receive an administrative fee in return, solely paid by suppliers. As a result, the nature and form of the GPO/hospital relationship is nearly unrecognizable relative to the “referral program” that was originally established.

Direct Sourcing:

Interestingly, a growing number of hospitals are now either opting for direct sourcing or making their own deals. They have found to commit in their volumes, where they target to achieve internal compliance and standards, further creates an impression to reward their suppliers. In most of the cases, hospitals work closely with their GPOs to accomplish it, the primary criteria required to what GPOs already do. But in most scenarios, hospitals tend to take a hybrid approach combining the contracts that are directly negotiated and pick the best available contracts already on the offer by their GPOs.

Local Purchasing Coalitions:

With growing support from the GPOs, hospitals are now joining hands to create their own supply networks that opportunistically aggregate demand at the category level. Forming purchase coalitions will reap greater benefits for the like-minded providers. They exemplify how healthcare SCM situation is changing. Such efforts to standardize to eliminate the variance in supply utilization at the procedural level are now better coordinated with their physicians, ultimately benefitting the patients.

Even though there are speculations thronging between various GPOs and many of these newly formed purchasing coalitions, it seems to be healthy one. Their very existence is directly supportive of an Affordable Care Act directive known as “value based purchasing.” Put simply, their innovations are not only serving to boost the operating performance of their members, but the evidence indicates that patients are benefiting as well.