Medical Cost Dollar Sign

A Firsthand Perspective on the Value of GPOs

Suman Gidwani Leeder Guest Blog:
By Suman Gidwani

How do we define success in healthcare? I frequently weighed this question during my internships over the past two summers: one at Columbia University Medical Center’s Neurological Intensive Care Unit and the other in the Strategic Contracting Services Department at GNYHA Services.

As an undergraduate considering a career in healthcare, I initially focused on the relationship between healthcare providers and patients, and the resulting delivery of care. Working in the ICU, however, I was struck by the complexity of the highly specialized technology that is integral to each patient’s treatment. The ICU machines sustain life for gravely ill patients. But as I learned during my internship at GNYHA Services, this technology simultaneously contributes to the increasing cost of care.

Witnessing the relationship between treatment and technology sparked my interest in the business side of healthcare. Physicians can’t always focus on the cost of care at the point of delivery. Decisions that impact cost often occur long before treatment. Then how does a hospital make these choices so that they offer the best value yet still lead to the best possible outcomes for their patients?

My work at GNYHA Services showed me how group purchasing organizations play an important role in the healthcare equation by balancing costs with patient care outcomes to deliver value. As technology has improved, healthcare has become increasingly measurable, and the role of GPOs has evolved. Healthcare supply chain is no longer about finding the lowest price, but rather finding the best value by merging clinical data and financial information. By helping providers deliver the best outcomes in the most cost-effective way, GPOs contribute to better patient care throughout the healthcare system.

GPOs like GNYHA Services strategically evaluate and choose the products they put on contract, aiming to find the best value for both the patient and the healthcare provider. Consider a product such as a small patch that monitors a patient’s vital signs then enables healthcare providers to access them through a mobile app. Among other benefits, this product allows patients to leave the hospital earlier, provides continuous monitoring, and can replace a number of other devices, thereby reducing cost and maintenance. When evaluating this product, the GNYHA Services contract specialists determined that the patch would be more effective as a single-use device rather than having a replaceable chip that nurses would have to switch frequently. Even though the initial cost might increase slightly with a single-use product, efficiencies created by reducing the amount of nursing time required would more than offset the cost, creating more overall value for hospitals while still leading to better outcomes for patients. In this way, GPOs not only take price into account, they also consider the clinical benefits that products offer those receiving and delivering care.

With supply chain accounting for more than 40% of total healthcare expenses in some sectors[1] and spending on care that doesn’t improve health outcomes totaling more than $750 billion per year in the U.S.,[2] it’s clear that finding a strategic approach that delivers better value is paramount. My internship taught me that GPOs can contribute substantially to this goal by helping hospitals achieve the best patient outcomes in the most cost-effective way.

 

Suman Gidwani worked as an intern in the Strategic Contracting Services Department of GNYHA Services during the summer of 2014. She is currently a senior at Duke University and expects to graduate with a BS in neuroscience in May.

 


1. Ebel T, Larsen E, Shah K.  Strengthening health care’s supply chain: A five-step plan. McKinsey & Company. September 2013.

2. Jauhar, S. Busy doctors, wasteful spending. The New York Times. July 20, 2014.

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