Healthcare’s ongoing push towards clinically integrated networks, health information exchanges, and riskier reimbursement models like value-based care continue to drive consolidation trends in the industry as providers seek allies to help shoulder new technical and financial burdens. As such, the purchasing power of affiliated facilities stands to reach new heights.
Group Purchasing Organizations (GPOs) managing the buying needs of healthcare providers are helping hospitals reign in some of that spending by leveraging the collective purchasing power of member facilities to negotiate savings on purchased goods and services.
According to Definitive Healthcare, 97 percent of hospitals are affiliated with one or more GPOs. And research from the Healthcare Supply Chain Association (HSCA) suggests that those GPOs manage about 72 percent of the purchases hospitals make.
These ten GPOs, ranked by the total number of member hospital beds, represent some of the industry’s broadest buying power.
Top GPOs by Member Hospital Beds
|Rank ||GPO ||Location ||Member Hospital Beds |
|1 ||Premier Inc ||Charlotte, NC ||350,358 |
|2 ||MedAssets (Vizient) ||Alpharetta, GA ||293,763 |
|3 ||Vizient (FKA: VHA, UHC & Novation) ||Irving, TX ||285,676 |
|4 ||Intalere (FKA: Amerinet) ||St. Louis, MO ||273,129 |
|5 ||Cardinal Health ||Dublin, OH ||212,099 |
|6 ||McKesson Pharmaceutical ||San Francisco, CA ||197,223 |
|7 ||AmerisourceBergen ||Chesterbrook, PA ||182,732 |
|8 ||HealthTrust Purchasing Group (HPG) ||Brentwood, TN ||168,462 |
|9 ||Department of Veterans Affairs ||Washington, DC ||39,244 |
|10 ||Provista ||Irving, TX ||27,947 |
Fig 1 Intelligence from Definitive Healthcare's Hospitals & IDNs platform. Member hospital beds taken from IDN member hospital reports from 2016.
It’s worth noting that healthcare’s consolidation trend is impacting the GPO market, as well. In February Vizient completed its acquisition of MedAssets with re-branding slated to be complete by the end of 2016. Vizient represents the largest member-owned healthcare company in the country whose diverse array of member health care organizations represents almost $100 billion in annual purchasing volume.
Some critics argue that the GPO buying process, which is funded by administrative fees paid by vendors (typically one to three percent of total negotiated contracts), favors larger vendors with higher price points and limits new vendor competition in the market.
Nevertheless, GPOs represent large-scale savings for many in the healthcare supply chain. Empirical analysis of U.S. health data (based on data published by the U.S. Centers for Medicare and Medicaid Services and conducted by HSCA in 2014) found that, from 2013 to 2022, GPOs are expected to generate savings of up to $864 billion for the entire U.S. health system, including $229 billion in Medicare savings and $169 billion in Medicaid savings.
Definitive Healthcare has the most up-to-date, comprehensive and integrated data on over 7,700 hospitals, 1.4 million physicians, and numerous other healthcare providers. Additionally, Definitive tracks organizations that play a part in the healthcare supply chain, including GPOs, ACOs, HIEs, CCTPs, and Payors, and shows affiliations between these organizations and providers.
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Note: This blog uses data available the year it was written and therefore may not be accurate at this time. Please visit our Blog or defhc.com for the most updated information.