Financial Management: Group Purchasing Organizations (GPOs)
In the United States and many European systems, Group Purchasing Organizations (GPOs) serve as the primary financial engine for procurement.
A GPO is an entity that helps healthcare providers—such as hospitals, nursing homes, and home health agencies—realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers and distributors.
By pooling their buying power, thousands of hospitals can secure lower prices than they could on their own. GPOs do not take ownership of the products; instead, they manage the Contracting Lifecycle. They evaluate clinical data to ensure that the products they contract meet safety standards. For a hospital, the supply chain team’s role is to ensure "Contract Compliance"—making sure the clinical staff uses the specific brands that the GPO has negotiated for. This synergy between GPOs and hospital SCM teams is what keeps medical inflation in check despite rising raw material costs.