What is the best strategy for selling to IDNs and GPOs in a consolidation?

Laser focus on industry trends is required in order to succeed in the healthcare market.Understanding hospital financial and operational performance is included.Cost-cutting measures are prioritized by healthcare facilities.Price negotiators can be used to lower costs in the supply chain.Two of the negotiators are Group Purchasing Organizations and Integrated Delivery Networks.Hospitals can lower costs by working with suppliers.IDNs and GPOs are merging to increase their market share.The healthcare market will be disrupted by this consolidation.

The goal of a GPO is to negotiate supply chain pricing.This could be for healthcare products and services.Group Purchasing Organizations use their market share and member volume to get discounted pricing.They can range in size and coverage, and are not exclusive to the healthcare industry.Products and services can be contracted for by member facilities at lower costs.Suppliers usually pay an administrative fee of 1 to 3 percent of the product price.Most of their revenue comes from these administrative fees.There are ways for healthcare facilities to reduce supply costs.They increase member awareness of new products.The growing membership of GPOs showed their importance.The data shows that 84 percent of hospitals are GPO members.80 percent of health systems report having a GPO membership.There are clear economic benefits for GPO members.Hospitals pay 13 percent less when buying through a GPO.$34.1 billion in total savings were achieved by these discounts.

An IDN is not solely responsible for pricing negotiations.A partnership among healthcare facilities is called an IDN.Hospitals, ambulatory surgery centers, long-term care facilities, physicians, and other providers are included.All members are under the same management system.The purpose of an IDN is to simplify care delivery.It increases the likelihood of favorable care outcomes.The size, operation style, and specialty of IDNs vary.The data shows that 76 percent of hospitals are IDN members.IDNs can use their size to negotiate price breaks for member facilities and reduce supply costs.In response to actual and predicted market pressures, IDNs are constantly evolving.TheACA passed in 2010 is believed to be the reason for the growing IDN influence.High-quality care can be provided at a lower cost.

The healthcare industry could use large IDNs as price negotiators.According to the data, more than 680 IDNs are affiliated with at least one GPO.IDNs can use GPO-negotiated prices as a ceiling to further decrease costs.

Industry experts are concerned about the consolidation of IDNs.A conglomerate purchasing group could result from the acquisition of GPOs by an IDN.Most pricing negotiations could be controlled by these groups.No single group controls a large enough market share to challenge competition.2,219 member hospitals are reported by the top two GPOs.New and specialized purchasing organizations are entering the healthcare market.Four major IDNs formed the Greenhealth Exchange.The Exchange is a cooperative that buys products that are friendly to the environment.

In a system where both have increased purchasing power, IDNs could have the advantage.Some IDNs make money by doing supply chain work for other facilities.IDNs may have a bigger stake in the outcome of pricing negotiations.GPOs are not tied to member facilities and may be less invested in pricing negotiations.This is different from IDNs, which manage member facilities.In a system dominated by IDNs, small and independent providers could be negatively affected.The current model may have less competition and higher purchasing prices.Competition is needed to eliminate inefficiencies in purchasing and negotiations.Purchasing decisions and trends must be analyzed over time when moving toward value.The value-based challenge is two-fold because of the treasure trove of data.Access to purchasing data is created in a responsible way.Simple data can be turned into meaningful intelligence that influences purchasing decisions.As the market consolidates and as we evaluate the role of purchasing organizations in an industry that lags behind many others, both factors are important.