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Independent report calls group purchasing a smart move

Posted Sep 16 2011 7:37am

Friday, September 16th, 2011

By Mike Stephens
Former CEO,
Hoag Memorial Hospital Presbyterian

An important report released this week explains that group purchasing is not only a smart business move, it is a powerful tool when it comes to driving down healthcare costs for hospitals.

The report was conducted by an independent group, considered a leader in supply chain and spend management initiatives. You can view the entire report by clicking here .

What the authors conclude, many of us who have run large healthcare systems have known for years: “Purchasing consortiums or group purchasing organizations are rapidly establishing themselves as a vital link in today’s world-class supply chain strategies. They are used as a powerful tool to significantly drive down costs for supply chain managers in the most effectively run procurement organizations in corporate America.”

Group purchasing allows healthcare systems to secure lower prices on thousands of supplies they use every day. To me, group purchasing organizations are one of the most valuable partners healthcare leaders should be teaming up with to truly reduce costs. I know this firsthand because when I ran Hoag, I too made sure we had these relationships in place and I can tell you the savings were invaluable. I would never run a hospital without this partnership in place. 

The independent authors of this report explain that company after company they looked at continued to show savings by working with a group purchasing organization.

While the authors say they had heard some skepticism in the past, in the end they were won over by the overwhelming benefits they saw right there in front of them. The fact is, the numbers don’t lie.

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