The Effects of GPO Relationships on Hospitals' Purchasing Performance Yoon Hee Kim
OVERVIEW
Group purchasing organizations (GPOs) have become the largest first-tier suppliers for most US hospitals. Several studies suggest that 90-98 percent of US hospitals purchase, on average, 73 percent of their supplies through GPOs. Faced with persistent pressures to cut costs, hospitals have increased their reliance on a GPO to lower total purchasing costs by tapping into a GPO’s pooled buying power and expertise over a wide range of products. Given that supply expenses account for about 30-45 percent of a hospital’s operating budget, selecting the right GPO is an important first step in improving cost efficiency and financial performance. However, extant studies ignore how hospitals should select a GPO, focusing mainly on the GPO’s roles and effectiveness in healthcare product supply chains. To fill this gap, we collected secondary data on 2,590 unique acute-care hospitals and their primary GPOs, and investigate which factors of GPO organizations and hospital-GPO relationships affect hospitals’ purchasing performance.
44 | Summer Research Fellowship
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