How to Achieve Significant Savings With a GPO: Q&A With Regent Surgical Health's Amy Gagliardi
Most surgery center experts extol the benefits of belonging to a group purchasing organization, through which surgery centers can achieve significant cost savings on supplies. But how do you know if your GPO is truly benefitting your organization, and how do you maximize the relationship to cut costs? Here Amy Gagliardi, vice president of supply chain for Regent Surgical Health, discusses the company's relationship with GPO Provista — and how the partnership has helped Regent save $1 million across 11 surgery centers in the last seven months.
Q: How much was Regent Surgical able to save from working with a GPO and over what time period?
Amy Gagliardi: When I first came on board with Regent Surgical, which was five years ago, there was no consolidation of our purchasing organizations. By consolidating all of our spend to one GPO, we were able to get to better tier levels to achieve greater savings. We saved a total of $1 million across 11 ASCs in approximately 7 months. We chose our GPO based on a market basket or cost savings analysis but being able to have a dedicated account representative to work with was also critical to our success.
I do quite a few association presentations and one of the questions I get a lot is, "How do you pick a GPO?" My response is that you should make sure you have a dedicated account rep so that you’re achieving maximum savings — you should never pay to belong to a GPO. It is also important to re-evaluate your GPO options annually.
Q: What specifically helped you save so much? Was there a process change or new approach that you adopted?
AG: One of the key things that we were able to achieve was higher contract compliance which saved about $10,000 per month, per facility. Contract compliance is basically ensuring that everything you buy for a surgery center, including medical supplies, pharmaceuticals, implants, office supplies — anything you need all-inclusive to run your facility — gets purchased through your GPO so that we're getting the best pricing.
Approximately 80 percent of everything you purchase for your facility is on a GPO contract. Making sure you use those contracts can help you save significantly, but monitoring your contract connection, expiration date and cancelled contracts is critical. Regent manages GPO contracts for our surgery centers. If you are a standalone surgery center, you need to ensure that your GPO will give you dedicated service, regardless of your case volume.
Q: What are some of the essential elements — fixed pricing, contract flexibility, ability to negotiate to include your current vendors, for example — that are essential to a successful GPO agreement?
AG: Fixed pricing and contract flexibility are very important, but when you're choosing a GPO, you want to make sure that you're able to locally negotiate contracts and that your GPO will honor that pricing and assist with managing the contract and terms you have negotiated.
Q: What do you think every agreement should include, from an administrator's and an ASC's standpoint?
AG: From an administrative perspective, your GPO should provide monthly or quarterly contract connection reports, detailed cost savings analysis and rebate opportunities, as well as recommendations to further decrease costs.
From an administrator's point of view, our GPO, Provista, has been an integral part of our entire business. They offer us clinical updates and alerts — for example, those related to recent drug shortages and estimated restock dates. Provista has helped Regent reclaim dollars due to incorrect billing, provided access to CEUs and attain benchmarking tools. They have [also] created a surgery center focus group that allows us to have a voice in what contracts they add to their portfolio.
Learn more about Regent Surgical Health and Provista.
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