Keeping the care in healthcare — GPOs enlist Spend Analysis for more than just savings

GPOs have the difficult task of reducing spend while sourcing for healthcare goods. As anyone who’s made purchases with someone’s health at stake knows – this is not an area you can cut corners. At the same time, physician preference items can be some of the costliest categories of spend facing the industry.

For healthcare procurement executives looking to bring in costs and improve compliance, a new trend is arising. GPO executives are deploying spends analysis more regularly to gain better visibility into areas of savings leakage and improve compliance tracking but they are also tapping the strategy for a new care quality purpose by aligning physician supply preferences with patient outcomes.

Procurement executives in hospitals and healthcare networks and GPOs are charged with, trimming the bottom line, but also face an even greater challenge – maintaining tight relationships with doctors to understand their product preferences and the connection to a much greater goal – the improvement of patient outcomes.
Cutting-edge GPOs are beginning to experiment with care results. By analyzing spend and tying products purchased back to positive patient outcomes, as well as cost, GPOs can decide what products make the most sense for the patients, as well as the bottom line.
With GPOs purchasing 100k plus categories on a monthly basis, advanced spend analysis is needed for this type of endeavor.

A Win-Win

Using spend analysis, GPOs can monitor contract compliance and improve patient outcomes with existing agreements to find missed opportunities for saving and to identify opportunities to improve patient outcomes with less costly product alternatives.

GPOs have a mountain of information at their fingertips – contracts, commitments, purchase history, invoices, vendor data and most importantly, supply, physician and procedure level patient outcome data. Spend analysis allows GPOs to enrich their spend data with outside information (market data, physician preferences, patient outcome data, etc.) to confirm that a contract is still providing value and to identify less expensive, more effective supply alternatives.
The high costs of healthcare dominate headlines and for good reason – purchasing a single pacemaker off-contract may be as much as $700 more than buying one from a vendor under contract. Physician preference items can be expensive. But if the cost can be justified by a better outcome, there is a greater value that is provided by the GPO beyond cost savings.

What’s the benefit for the GPO, why would they want to invest in areas that aren’t instrumental to savings – how can they measure success? By working with a company that is improving health, ultimately there is benefit which ties back to spend. Healthcare organizations want their patients to be healthy – but also on the economic front, they need to responsibly source their goods.

Spend analysis and patient outcomes seem like unlikely partners, but with 80% of overall healthcare spend controlled by the top GPOs, they are implementing spend analysis to find ways to make much needed cost reductions while upholding the same standard of care – deciding what products make the most sense for the patients, as well as the bottom line.

Paul Martyn

Paul Martyn is VP of Supply Strategy at BravoSolution, the spend analysis company.

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