Group buy program helps hospitals save $81 million

Over the past year, 1,220 hospitals participating in the Premier healthcare alliance's group buy program have identified $81 million in savings through access to high-quality products at low costs.

“This program provides our members a wide variety of cost-effective quality products and services to increase patient safety while lowering costs.”

The group buy program delivers hospitals value through coordinated, volume driven purchasing opportunities. Savings vary between 5-15 percent and the program offers value-adds such as special financing rates, trade-in programs, preventative maintenance, training, service programs and extended warranties.

The program also allows smaller facilities like physician's offices, ambulatory surgery centers, and nursing homes to achieve benefits, whether in negotiating value-adds or bottom line dollars saved. Fairview Health Services and 22 affiliates have saved $1.1 million on group buys totaling $8.3 million, a 13 percent savings beyond Premier's regular contract prices.

"With reductions in Medicare margins and cuts across the board due to healthcare reform, hospitals need to find effective ways to reduce costs in the supply chain," said Mike Alkire, Premier Purchasing Partners president. "This program provides our members a wide variety of cost-effective quality products and services to increase patient safety while lowering costs."

Member participation in the program has increased an average of 19.3 percent over the past three years. And with supplier satisfaction at 4.7 out of 5, suppliers highly regard the group buy program as a valuable component to their national agreement.

"Suppliers have been happy with the program. They can increase product visibility throughout the Premier alliance, amplifying sales and speeding up their sales cycle," said Alkire.

Current group buy events for members include:

• Gas plasma sterilization/automated endoscopic reprocessor (Johnson & Johnson Healthcare Systems Inc.);
• Imaging equipment (GE Healthcare);
• Instrument containers (Specialty Surgical Instrumentation);
• Patient room and systems furniture (Steelcase Inc.);
• Pulse oximetry devices (Nonin Medical Inc.);
• Smoke evacuation systems (Microtek Medical Inc.); and
• Surgical energy products (Covidien).

Though initially developed for imaging capital equipment purchases, the group buy program expanded to incorporate other service lines. Successful group buys have included products from lines of business such as cardiovascular, facilities/construction, foodservice, IT services, laboratory, medical/surgical, and continuum of care services.