The Elusive Group Buy: GPOs, Healthcare and Beyond (Part 2)

In the first post in this series, we examined how healthcare GPO provider Premier is tackling group-buying opportunities and the success it has realized for members above and beyond the standard leveraged pricing that GPOs typically provide. Yet to make group buys work, as my colleague Tom Finn on Healthcare Matters observes, technology is what can (and will) form the basis of making this technique a more frequent (and successful) means of negotiating optimal pricing, terms and service levels with suppliers.

On the most basic level, the following requirements are necessary to enable group buys through technology-automated approaches (note this is certainly not a complete list and specific requirements will likely vary category by category):

  • Contract visibility tools to "discover" existing requirements among participants in the group buy and what contract clauses/types they require as a basis of participating (a supplier can later back out of a deal if they do not agree to terms up-front)
  • Item-level spend analysis that ideally should go beyond just capturing AP and invoice-level information to incorporating other variables on a category-by-category level (past performance, risk, diversity, environmental practices/compliance, etc.)
  • Stakeholder management/collaboration tools to capture all internal requirements (soft and hard) and then aggregate these requirements in a manner to allow members to prioritize and "vote"
  • Sourcing technology that goes beyond basic RFX and auctions and includes multi-round, competitive optimization-driven approaches that allow those participating in the group buy to evaluate different supplier offers against both individual and group constraints
  • Embedded market intelligence tools (e.g., commodity price indexes) to separate value-added supplier services from base material costs (even in the case of certain MRO and indirect categories purchased on a large scale)

Whether GPOs drive group buys or other types of consortia lead the charge, it's critical to prioritize the right technology platforms to not only facilitate the bid itself, but also to drive outcomes which lead to maximizing implemented savings.

- Jason Busch

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