GPO’s, the Latest Trend in Dentistry…and Its Here to Stay
By: Jordan Herbert, Co-Founder & COO, Independent Dental Solutions
Although group purchasing organizations (“GPO”) have been around for over a century, GPOs only entered the dental market in the past few years with limited adoption rates. Recently, they have exploded to the forefront with many dental practices looking for ways to continue to compete in an ever-evolving dental market. Therefore, the purpose of this article is to provide an overview on group purchasing organizations and potential ways they can provide value for your practice. As a point of reference, the medical-hospital market has leveraged GPO’s for 40 years to reduce cost by $50 billion dollars a year and 98% of hospitals are part of a GPO.
What is a Group Purchasing Organization (GPO) & How do they work?
In its simplest form, a GPO is an organization that groups businesses together in order to negotiate volume discounts and value-adds from vendors and service providers based on the group’s collective purchasing power—think of Costco or Sam’s Club. The GPO represents the group’s interests and establishes vendors contracts with favorable pricing and terms. In turn, as a member of the GPO, the business can take advantage of these contracts which results in savings or revenue enhancement. Then, as the group grows, the GPO continues to negotiate new vendor agreements based on the greater purchasing power which results in further savings for the group. The GPO member continues to purchase from the vendor directly at the GPO contracted price, while the GPO acts as the administrator and check/balances of the contracts. In order to act as the administrator and continue to grow their offerings, GPOs are primarily funded by three models: administrative fees (typically, a percentage of revenue) from the vendors, membership fees, or a combination of both.
Why is this relevant to your practice & How can you take advantage of a GPO?
The individual private practitioner wears many “hats” at their practice. Therefore, buying groups provide much needed support to these dental practices by providing substantially discounted contracts for supplies, equipment, lab, and many other services.
Our GPO, Independent Dental Solutions (IDS) is a no-fee buying group run by a board of established dentists and experienced supply chain and distribution leaders. IDS administers a discounted merchandise and equipment program for dentists throughout the United States to can help you save up to 30% annually when compared to your prior year’s spend. Recently, IDS group prices on 7,418 items went down by an average of 11 percent. If you are interested in learning more about IDS, please visit their website at: https://independent-ds.com.