There are many misconceptions about group purchasing organizations (GPOs). Often, it’s these myths and assumptions that prevent organizations from experiencing the many benefits of joining a GPO.
Let’s disprove those myths, debunk those misconceptions, and reveal the truth about GPOs.
Myth #1 — Only Healthcare Organizations Can Join a GPO
Truth: Any business or organization can join a GPO.
Although GPOs did originate in the healthcare industry in the early 1910s, and are most commonly used by healthcare providers, organizations in any field can join a GPO and access savings through the power of group buying.
Recommendation: Always Review a GPO’s Contract Portfolio
Some GPOs specialize in certain markets. As such, the products they have on contract are tailored to meet the needs of their members. When assessing if a GPO is right for you, review their contracted suppliers to make sure they offer discounts on the products you purchase.
Myth #2 — My Organization Is Too Small to Join a GPO
Truth: Organizations of any size can join a GPO and thrive.
Whether measured by the number of products purchased, sites run, or employees on the payroll, there are no size requirements for organizations to join a GPO. If your company purchases products from any supplier, then you will benefit from becoming a member and purchasing through a GPO — it’s that simple.
Recommendation: Join a GPO and explore the benefits!
Find a GPO that offers no-cost membership, has contracts that align with products and services you already purchase, and doesn’t apply minimum purchasing requirements.
Myth #3 — All GPOs Are the Same
Truth: Every GPO is different.
Just because all GPOs provide access to contracts with reduced pricing, they are not all the same. There are many ways in which GPOs can differentiate themselves, including:
- The suppliers they have contracts with.
- The products covered by their contracts.
- The purchasing power they harness to negotiate contracts.
- The level of discounts available through their contracts.
- The operational support they provide.
Recommendation: Do your research to make sure you join a GPO that’s right for you.
Do your due diligence when deciding which GPO you should join. Finding information relating to the bullet points above is a great place to start and will help you determine which GPO is right for your organization. You can also check out our blog post, “Five Things to Look for in a GPO”, for more guidance.
Myth #4 — If I Join a GPO, I’ll Have to Purchase More
Truth: You should not be required to purchase a certain amount through your GPO.
While some do, the best GPOs will not restrict you with minimum purchase requirements. Your GPO should never pressure you to buy more or spend a certain amount. They should be focused on reducing the cost of the products you already purchase and helping you save on future purchases as your needs change.
Recommendation: Purchase the same products when you first join a GPO and benefit immediately.
The best place to start when you become a GPO member is to begin purchasing the same products and services as before but through your GPO’s contracts in order to realize savings immediately. Then, as your procurement needs change, utilize the breadth of your GPO’s contract portfolio to access discounts on new products.
Myth #5 — GPOs Aren’t Transparent About Their Business Models
Truth: GPOs are required by law to provide certain information to their members.
GPOs are governed by a variety of rules, including anti-kickback laws and safe harbor regulations. Under these requirements, GPOs are limited in the administration fees they can acquire from suppliers and must annually disclose the administrative fees they receive from suppliers. Your GPO should offer complete transparency in regard to these fees as well as memberships specifications, purchasing requirements, and their suppliers.
Recommendation: Find a GPO that values transparency.
One of the most important qualities to look for in a GPO is transparency. When choosing a GPO, make sure you join one that demonstrates its commitment to providing its members with all the information about its practices.
Myth #6 — I Can Get Greater Savings on My Own
Truth: GPOs help members get better prices by using the purchasing power of their entire membership.
While personal relationships with suppliers may help you get better prices than the average customer, your organization will still be limited by its purchasing needs. Suppliers reserve the greatest discounts for customers who purchase the largest amount of product — that’s where a GPO comes in.
GPOs negotiate discounted prices with suppliers using the combined purchasing power of their members. Drawn by the potential purchasing volume, suppliers then agree to offer lower prices to the GPO’s members. Most member organizations often have access to larger discounts than they’d be able to negotiate on their own.
Recommendation: Join a GPO and review the savings available to you.
You’ll never know how much more your organization could be saving until you join a GPO. Although you can’t access prices or specific contract details before you join a GPO, choosing one with a healthy membership base and significant purchasing power increases the chance of you getting the best prices.
The Truth About CNECT
At CNECT, our members are our partners. We work to help them achieve their financial and operational goals, focusing on what they need to succeed. Organizations across all industries and of all sizes join CNECT, taking advantage of no-cost membership to save money. They access discounts on more than 2.7 million products, benefit from our $82B in purchasing power, and buy as much or as little, and as frequently, as they need.
Does this sound like something that would benefit your organization? Contact a CNECT representative today and discover how a CNECT membership empowers you to achieve more.