Scratching the 3-year itch: Why sales should leverage shifting GPO-provider relationships

Sales teams have their own sense of time. With weekly, monthly, or quarterly sales targets hanging overhead, it’s easy to become fixated on fulfilling the next quota. However, the biggest provider organizations—the white whales for businesses selling into healthcare—operate on a much longer scale.

Teams selling to larger healthcare facilities or networks can close more deals by taking a longer view and thinking in terms of years—around three years, to be specific. That’s the average length of a contract between a provider and a group purchasing organization (GPO).

Why are GPO contracts important to sales teams?

Healthcare systems partner with GPOs (or, in some cases, own the GPOs themselves) to save money by aggregating purchasing volumes and gaining access to bulk vendor discounts.

A 2021 report from the Healthcare Supply Chain Association found that GPOs saved providers around 13% on supply related-costs and about $34.1 billion annually. The same report projected that GPOs would save the industry around $456.6 billion from 2017 through 2026.

With so much money on the line, GPOs are highly selective about the vendors they work with. Drastically simplified, during the vendor selection process (i.e., the GPO award cycle), the GPO:

• Identifies the needs of its members
• Issues requests for proposals (RFPs) to vendors
• Evaluates those vendors’ proposals
• Awards contracts to selected vendors
• Implements and monitors the agreement
• Renews or re-bids the contract, based on supplier performance, market conditions, and member needs

Because GPOs have such significant influence over provider purchasing decisions, organizations selling into healthcare must understand which providers are working with which GPOs, the level of purchasing autonomy those providers are granted, and the duration of the contracts governing their relationships.

How to leverage GPO contracts for enhanced sales

While most GPO contracts cover a three-year period, cycles of five years or more are not uncommon. When building a list of provider prospects, be sure to research their affiliated GPOs and the duration of any contracts.

By building sales strategies around the start and end of these contracts, sales professionals can identify the most opportune time to engage prospects, align their offerings to GPO preferences, and stay ahead of competitors who may be caught off guard by changes.

Seize opportunities in contract changes

When an existing GPO-provider agreement is set to expire, either party may be interested in renewing, renegotiating, or moving on from the relationship entirely. Sales teams that track these cycles can time their outreach to coincide with periods of change, offering solutions and pricing options that meet the shifting needs of either the provider or GPO.

If you catch wind of an impending breakup between a provider and GPO, dig a little deeper into both parties’ reputations, cultures, and goals. Potential points of misalignment or dissatisfaction can be guideposts for your own sales pitch.

Keep an eye out for GPO membership expansions or health network acquisitions and consolidations, too—either scenario may create opportunities to reach new markets, connect with new decision-makers, or position your organization as a preferred vendor under the shifting needs of the GPO or provider network.

Align to GPO preferences

GPOs often negotiate contracts that determine which vendors and products are “preferred” for their members. Sales teams targeting healthcare providers can tune in and align with these preferences to improve their chances of securing deals. As GPO-provider relationships change, previously preferred vendors may lose access to certain health systems, opening doors for competitors (like you).

Speaking generally, GPOs are most focused on pricing structure, but cultural and regulatory alignment with their members is also important. Tracking the GPOs working with target providers makes it easier to understand a prospect’s goals beyond cost-saving.

While all GPOs strive toward cost-savings through bulk purchasing, the level of control they exercise over the purchasing process varies by organization and contract. Some GPOs grant providers broad autonomy to choose their own products, while others require strict adherence to contract vendors. Monitoring these dynamics can help sales teams prioritize targets, tailor their pitches, and potentially find easily missed opportunities with providers who work with more lenient GPOs.

Out-time the competition

Sales teams that proactively monitor shifts in GPO-provider relationships can gain an advantage over competitors who aren’t prepared for evolving purchasing dynamics. Of course, you shouldn’t bank on your competitors’ ignorance (they might be reading this blog, too).

You can get a more significant head start by equipping your organization with a database of providers and GPOs serving your market. On average, hospitals partner with two to four GPOs at a time to cover a variety of purchasing functions. If your list of prospect facilities or networks is getting into double digits, that’s a lot of ground to cover. Working with a qualified data vendor means less time spent researching and more time to strategize, engage, and sell.

Discover the GPOs serving any U.S. provider

There are over 600 GPOs operating in the U.S. Whether you’re selling medical equipment, supplies, or pharmaceuticals to providers, you need to be able to quickly understand who’s working with whom, what their goals are, and who the best points of contact are.

Definitive Healthcare offers detailed providers on GPOs and regional purchasing coalitions (RPCs) to help you make sense of healthcare purchasing and identify key decision-makers. Sign up for a free trial today and see which GPOs are being used by any provider in the U.S.