How can GPOs help Hospitals?

GPO or Group Purchasing Organization is a business model that plays the role of an aggregator for
health care providers like hospitals, maternity homes and others. This model is primarily predominant in
USA to reduce healthcare costs. So, how exactly do these GPOs help? They work based on the wholesale
system where they buy medical equipments and other hospital oriented requirements at a low cost.
In 2008, the six largest GPOs in USA accounted for about 109 billion dollars in purchase for the member
Hospitals.

In India too, GPOs are playing a prominent role. They do help cut costs for health care providers,
especially for smaller hospitals which can benefit from the whole sale model of GPO for purchasing
commodities like beds, equipments etc.

But, with the advent of modern technology and physicians making their own choice of the best
equipment for the hospitals, is the GPO model declining? Technology and new disruptors in the market
in terms of healthcare start-ups are changing the wholesale model. So, how can the GPOs survive and do
the hospitals really need them? It’s good news for the healthcare system that GPOs are already adapting
to the change. GPOs like VHA and Cleveland clinic are already partnering together to reduce costs and
meet the demands of physician preference. Also IBM and Premier are using predictive analytics to
improve their services. So, do hospitals require GPOs? Yes they do. But they require GPOs that adapt and
change according to the needs of the present day. Those who do, will thrive but others will not survive.