Why Group purchasing is important for small to mid-sized healthcare facilities
Group Purchasing has garnered increased relevance as a cost-effective and smart option to purchase medical equipment for healthcare facilities. First established in 1910 by the Hospital Bureau of New York, GPO (Group Purchasing Organisation) entities now handle over $200B of group purchasing volume in the United States.
While this concept is still very new in India, Doctors in the country are implementing their version of GPO’s through WhatsApp groups and Social Media. However, the impact of savings and the investment of time and energy in actioning these small-scale GPO strategies can result in very low ROI for time-strapped doctor-owners.
This article explains the issues faced when trying to action this kind of GPO scheme and offers a solution that can combat the common problems associated with implementation of this model.The 3 pillars that determine the success of a Group Purchasing scheme are Group size, Technology and Marketing.
Group Size: This one is obvious. Savings increase as the number of buyers increase. While an average Doctor’s friends circle might include a few potential buyers for a product, how do you widen your reach to include buyers from other states and cities? Majority of the time, people are just browsing, which means that all your time and effort to collect buyers can go down the drain.
Technology: The effective use of technology can positively impact the implementation of the Group Purchase model. Be it in marketing the group deal, collecting interested users, reaching interested buyers across multiple locations and tracking price changes based on buying quantities. At present, the small version of GPO organised by Doctors mainly relate to marketing the deal, and seldom towards the coordinating the multiple moving parts for a group deal (which is where majority of time and effort gets invested).
Marketing: Marketing is the most important aspect of a group deal. This is where you communicate about the deal to your network, educate potential buyers, and get interested buyers to sign up. Without marketing, the GPO concept will be just an idea. Several online and offline marketing techniques can be implemented to get more potential buyers for a group deal, and these typically warrant a decent investment of time – something that is extremely valuable to a Doctor. Considering Doctor’s busy schedules, GPO schemes are usually done during the Doctor’s free time.
In spite of the challenges listed above, Doctors are able to do a great job in implementing small-scale group deals and get notable savings on equipment across different specialties. But is it all worth it? You might save on the product cost, but one might end up losing money, in the implementation process. Let me give you an example. To successfully implement a online Group Deal, we need to employ personnel in Marketing, Sales, Vendor management who are crucial for the effective execution of each deal – increasing our initial investment. However, being an e-commerce platform, each group deal can be marketed to its full capacity, to reach several states, cities and towns in the country, and collate the maximum possible buying power to negotiate the best price with vendors, while ensuring that the product reaches the Doctor on time. This need not be the case when a single doctor needs to coordinate between multiple WhatsApp groups, peers and manufacturers to get interested buyers and the best price.
The Group Purchasing model is a great concept – the key is in its implementation. By implementing a favourable combination of “Group size”, “Technology” and “Marketing”, one can make massive savings – both by way of product price, and also through the implementation process.
