For many people, a Costco membership is great way to save money. The premise is simple: join our group and get access to low, pre-negotiated prices. Group purchasing organizations (GPOs) operate similarly for hospitals, aggregating supplier spend to secure the best available prices for members. But here’s the truth: if you’re just relying on your GPO to do all the saving for you, you’re probably not getting the best deal. In the same way you can use limited-time coupons offered by local Costco to save even more money, you can secure local savings on top of what’s guaranteed by your GPO contract.
Negotiate locally to save even more. To be clear: GPOs can provide significant savings, especially for supplies and consumables. But GPOs are built to span long time horizons that may not align with how your hospital purchases capital equipment. By negotiating locally, you take advantage of time-bound dynamics like supplier incentives and market conditions to secure savings on top of what’s guaranteed by your GPO. And even if your GPO has reduced the unit cost to the lowest possible price, remember that there are still many cost drivers (warranty, service, implementation, training, trade-ins, etc.) that impact the bottom line.
Recently, a Miga hospital client was purchasing sterile processing equipment, and their GPO membership gave them access to reduced cost of $199k (19% below list). After some negotiation, the supplier rep wanted to incentivize a quick purchase and offered a price of $145k—an extra 27% on top of GPO savings! Many in the hospital were ready to declare a job well done, but the EVMS Purchase Quote Review “POOR” rating indicated substantial savings remained. After three more rounds of negotiating (where the rep kept beating his “best” price with an even “best-er” price), the client was able to reach a final purchase price of $80k—nearly 45% less than what hospital leadership was ready to sign for (their response: “WHOA!”). That’s the power of the best information combined with local negotiation.
Powered by the industry-leading Miga EVMS® (Equipment Value Management System) platform, Miga Solutions enables hospitals to realize guaranteed savings on medical, lab, and IT equipment lifecycle costs by utilizing best-in-class market information from more than 50,000 unique data sources.