The relationship between healthcare providers and GPOs is constantly changing and evolving, especially in the last few years. The pandemic put an incredible strain on the healthcare industry as a whole: everything was much more expensive and supply chain disruptions led to increased wait times for materials that were desperately needed by the providers.
Recently, HIDA held a webinar to discuss the emerging trends regarding GPOs and contracting for hospitals and surgery centers with guests Kim Anders, Group Vice President of Strategic Supplier Engagement for Premier; Tim Bugg, President and CEO of Capstone Health Alliance; and John Pritchard, President and CEO of Share Moving Media. Here are the four main takeaways from the session:
- Understanding how the GPO-provider relationship is changing It’s critical to understand the relationship between a provider organization and its primary GPO. Anders says that the core of what an organization like Premier does daily isn’t going to change much. Anders explained, “We still need to make sure that we’re true to our mission of improving the health of communities every day. That means adapting a strategic technology enabled approach to candidly saving money on the products that we buy on a daily basis.” It’s all about finding ways to strengthen the partnership, whether it’s improved advocacy or aligning initiatives. For example, the shift towards value-based care for providers should also initiate a shift towards value-based contracting, Anders says. Aligning the goals for both parties is critical to the strength of the healthcare industry, even if it merely improves communication between the two. Bugg said, “During the pandemic, we found that hospitals really saw themselves on an island a lot of times with no lifeboat. They didn’t know who they could communicate with.”
- What it takes to build resiliency The main idea behind a more resilient supply chain is increasing domestic manufacturing. But what often comes up is that if you want domestic manufacturing, you have to support it. If you want more inventory in the supply, you have to support it. How else can we improve the resiliency of our supply chain? Anders said that while domestic manufacturing is a great way to ease the pressures on the supply chain, it isn’t the ultimate solution. For Anders, resiliency can mean other things: introducing the opportunities of nearshoring, having a better understanding of raw material, or identifying a glitch in the supply chain soon enough to react in a timely way.
- Establishing transparency is key Transparency is key to understanding where your product is when it’s coming. With better transparency, you have a better idea of when your product is coming or what you can use as a substitute if it isn’t coming. Transparency can also give you better insight into the inner workings of the industry itself. Bugg said, “During the pandemic, we had a lot of hospital members who just kind of threw up their hands because they didn’t know whose job it was to find them a new respirator mask. Whose job is it to source that? Is it my distributor’s job? Is it my GPO’s job? Is it my job? Shame on us to some degree for not having some disaster preparedness.”
- How suppliers can build business with GPOs There’s a unique opportunity for suppliers right now to build better business relationships with GPOs. Bugg said, “I think it’s a really exciting time for small diverse suppliers right now to get into the market and have competitive products to the big names. And I think hospitals are looking to partner with some of those folks.” Even with this opportunity, it’s important to implement a strategy so that you can be better prepared to earn the conversion. “The first thing suppliers have to do is come up with a really solid segmentation strategy,” John Pritchard said. “If you had the cure for cancer and knocked on every hospital’s door, most of them can’t convert right now. They’ve got competing strategies.”