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March 1, 2024

Your GPO Exclusivity Agreement Is Holding Back your Supply Chain Strategy

In the last five years, a handful of major GPOs have been acquired or left the market. In the wake of this change, we’ve seen a trend of GPOs trying to create exclusivity with their health system clients. And health systems often agree to gain access to a GPO’s purchasing power. But do exclusive GPO contracts actually drive more value for health systems and their patients?

“A GPO that handcuffs you from options is not your partner,” says Dan Hurry, president of Advantus Health Partner. “To drive value, you need options.”

Trader Joe’s vs. Target: You Need Both

Dan thinks exclusive GPO arrangements are like pitting Trader Joe’s against Target. It wouldn’t make sense to ask a consumer to choose between the two. They need both. Consumers shop at Target for different reasons than they shop at Trader Joe’s; each store brings unique value to their shoppers. 

The same idea applies to health care supply chain. While certain GPOs can grant health systems lower prices on certain products, they simply can’t offer the best value in every category. A secondary GPO or supplemental GPO can provide unique, valuable contracts and vendor partnerships that not only lower costs but improve patient outcomes. 

For example, Advantus brings unique value to its customers with offerings many traditional GPOs can’t match: 

Not only do these offerings come with economic benefits (cost with quality), but they also improve patient care. For example, health systems that use healthcare technology management (HTM) with GE HealthCare can conduct more imaging tests because their technology experiences less downtime.

Suggested read: Four Common Myths about Healthcare Technology Management

Rethinking the GPO to Put Patients First

Exclusivity isn’t your only option. The health care supply chain industry is ripe for change that prioritizes health systems and their patients. 

“Many think that the GPO is about savings and cost, but that’s not the full equation,” says Dan. “A GPO should drive value for patient care. And exclusivity does not drive value for patients.” 

So, what can you do about it? You can ask your current GPO to remove their exclusivity requirement from your contract. This opens up the option to work with secondary or supplemental GPOs. It gives you the power of choice to create a quality-driven, sustainable supply chain strategy. 

Supplement your Supply Chain with a Secondary GPO

Is your health system looking to supplement its supply chain with value-added partnerships and non-exclusive contracts? Contact Advantus to discover how our unique vendor partnerships and PPI contracts can help you deliver better patient care. 

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Find out more about how we can help you transform your supply chain.