We all want to impress our boss. When you report to the CFO for a hospital or integrated delivery network, showing an ability to manage costs and apply new revenue streams are terrific ways to stand out. With hospital margins currently down1, are you using GPO rebates to their full extent to meet both goals?
You already know most hospitals and IDNs are a part of a group purchasing organization. If you are not already aligned with Premier, Vizient or HealthTrust, odds are your regional purchasing organization is. If your facility isn’t 90 percent or more compliant with your GPO, you could miss a valuable revenue stream – GPO rebates.
While labels may not seem like the most direct path to improving margins, the truth is they are used in every healthcare facility…the reality is it’s easy to convert to Caresfield labels.
What is a GPO Rebate?
A GPO rebate is a financial incentive to buy items on your GPO contract from contracted vendors. As these vendors change over time new vendors will often offer rebates to reward you for converting to a new product. For example, Caresfield is currently offering a conversion growth rebate to new Premier customers who convert to Caresfield labels and identification products.
Many factors combine to determine which rebates are available. Often rebates depend on the tier or program your system enrolls in with your purchasing organization. Higher level programs may have bigger rebates but usually require higher compliance.
While labels may not seem like the most direct path to improving margins, the truth is they are used in every healthcare facility. Whether it’s your admissions team and nurses labeling charts or IV lines or the lab applying blood tubes labels, these products are needed to communicate clearly. Many facilities worry about needing to change printers or long conversion times, but the reality is it’s easy to convert to Caresfield labels.
Want to learn more about to how to leverage GPO benefits with Caresfield?
With thousands of contracted vendors and SKUs to manage, it can be hard to know where to start. Try meeting with your dedicated GPO regional director or representative. Make sure they know you are looking to convert on new products, especially those where suppliers are offering additional rebates. Not only could you see thousands in cost savings, you could also boost your revenue with new rebates.
Hidden Costs of Local Agreements
Sometimes, we think we can beat the system. Many purchasing managers work to get a better deal outside of a GPO contract. While it may seem like a lower price per unit, make sure you account for GPO value adds. As part of their contract negotiations, a GPO can negotiate benefits like free freight. Ordering through your contract also cuts other fees like:
- Distribution fees, if ordering direct
- Fuel surcharges
- On-site conversion support
- Staff training
Make sure you consider every hidden cost. With the rising costs of fuel and inflation, you need every advantage you can find to remain profitable.
Tips for Maximizing GPO Rebates
In a blog post earlier this year, SVAH Solutions listed three ways supply chain management could lose money with rebates2:
- Tracking rebates manually
- Tracking rebates with spreadsheets
- Relying on GPOs to track rebates
It’s good advice. You likely have thousands of contracts, trying to track everything manually would take a tremendous amount of people power. Rely on help from your GPO and trusted suppliers like Caresfield.
To maximize your GPO benefits, we encourage you to order on contract whenever possible. It can also be beneficial to order direct from your suppliers. With Caresfield, you can either call or email a purchase order or register for an online account. By sharing what GPO you’re a part of at order placement, you’ll immediately receive market competitive pricing negotiated by your GPO. We’ll also merge all the products your facility orders in one place. Our GPO customers receive free freight and same-day shipping on orders of in-stock items placed by 2 p.m. Central.
Some health systems are large enough to support their own fleet of trucks and warehouse space. Others are small enough where they can order through distribution to support just-in-time practices. For most health systems, relying on GPOs can help reduce costs and build new revenue streams through rebates.
Additionally, some facilities sacrifice GPO rebates and order off-contract to meet diversity goals. Once again, Caresfield can help! We are a small business and our labels are made in the U.S., which will help meet your diversity goals without sacrificing rebate opportunities.
Critical Benefits of GPOs
While the example above cautions against relying solely on GPOs to track rebates, purchasing organizations supply a number of services to streamline your purchasing process. They vet suppliers to make sure you are getting quality products at the best price. They also handle contract management, lifting the burden of negotiation from your plate.
For suppliers like Caresfield, it’s difficult to land a GPO contract. A supplier must have a significant market share and most of the time, we take part in the request for proposal (RFP) process for several different product categories. Through the RFP process, suppliers are able to offer exclusive value adds and rebates to bring the best possible value to GPO members.
Your CFO likely played a major role in deciding which GPO your system uses. Executives usually compare bids from multiple GPOs to find the best value. It’s a common practice, especially with mergers and acquisitions in today’s healthcare market. Make your work stand out and improve your system’s margins by taking full advantage of GPO rebates. If you’re ready to get started, let’s talk!
- Kaufman Hall National Hospital Flash Report, https://www.kaufmanhall.com/sites/default/files/2022-06/KH-NHFR-2022-06.pdf, June 2022, accessed July 21, 2022
- SVAH Solutions, Healthcare Supply Chain Management: 3 Ways to Lose Money with Rebates, https://svah-solutions.com/healthcare-supply-chain-management-3-ways-to-lose-money-with-rebates/, accessed July 20, 20222
