Going Local versus Going National for Non-clinical Procurement: The Power of Local Contracts

Group Purchasing Organizations (GPOs) and their ability to negotiate on behalf of their entire membership have traditionally served as the go-to healthcare strategy for savings and efficiencies.

However, while broad nationwide contracts with GPOs may suffice for medical supplies, they may not be the optimal solution for specialized, localized non-clinical goods and services, which often require distinct considerations based on community and regional requirements.

We’ve observed that GPOs’ business models are not fully aligned with the goal of securing the best value for these specialized services. The diverse needs and requirements vary significantly from one region to another. For example, the lawn service needs of a healthcare facility in North Dakota would vastly differ from those of a similar institution in South Carolina. Contrasting climates and indigenous plant species make it impossible for a GPO to optimally source for this service. Similarly, pest control measures in an urban setting would not be identical to those required in a rural environment.

When it comes to procuring non-clinical goods and services, local contracts offer several key advantages over broader, national GPOs. Here are a few reasons why local contracts can significantly benefit your health system:

Regional Differences and Availability

Different regions have varying needs and supply availability. Local providers possess a deep understanding of these regional nuances and can tailor their offerings to meet these specific requirements. This ensures that your hospital has access to the precise supplies and equipment it needs, minimizing potential delays or the need for alternative solutions.

Cost Efficiency

While GPOs leverage collective purchasing power to negotiate discounts based on volume, partnering with local suppliers can potentially yield even better prices and service levels. Close relationships, increased flexibility, and reduced administrative costs that are commonly associated with GPO membership all contribute to this cost efficiency. Direct negotiations with local providers may also allow for customized pricing structures based on your hospital’s unique needs.

Faster Support and Enhanced Collaboration

In case of emergencies or urgent requirements, local providers can offer quicker response times compared to GPOs, which may have more drawn-out procurement processes. This immediacy can be crucial in ensuring patient care is not compromised. Local providers also offer personalized customer service and tailored support, resulting in a smoother procurement experience.

Increased Choice and Customization

GPOs typically work with a predefined list of suppliers and products, limiting the choices available to hospitals and potentially restricting access to specialized or niche products. By partnering with local providers, hospitals can tap into a broader network of suppliers and gain access to a wider range of products. Local providers are often more receptive to customization requests, allowing hospitals to obtain tailor-made solutions that align with their unique requirements.

Quality Assurance and Regulatory Compliance

Working with local providers enables hospitals to have greater control over quality assurance processes. By sourcing locally, hospitals can establish direct relationships with suppliers, ensuring better oversight of product quality, safety, and regulatory compliance, reducing the risk of counterfeit or substandard products entering the healthcare system.

Supporting the Local Community

Choosing local contracts also reflects a commitment to local vendors and the community. This can enhance the reputation of your health system, strengthening relationships with local businesses and the community-at-large.

At LogicSource, we understand each health system faces their own unique challenges across their non-clinical procurement function. We offer access to a tested-and-proven network of suppliers and, using over $100B of cross-industry spend and pricing data from our client portfolio, we are able to generate significant insights and drive deep savings across your non-clinical spending.

With greater precision and coverage than any broad national-level GPO can provide, LogicSource is poised to revolutionize your procurement process.

Sometimes, the best solution isn’t the biggest, but the one that understands you the best. Whether you’re looking to source locally for the first time or seeking to improve your current local procurement processes, LogicSource can partner with you to help.

Read more about how LogicSource works with health systems to drive savings and margin improvement.