Check out this great article by Ken Murawski of Healthcare Links. It really gets to the core of the best strategy depending on what your product is.
Years ago, hospitals joined GPOs in order to help them negotiate the best prices based on large membership associations. As IDNs evolved, they reduced the number of staff needed to negotiate these contracts on their own. The model grew quickly as the GPOs wisely shared back a portion of the administrative fees with the health system administration of their more compliant members.
As you can imagine, when the CEO received a large check from their GPO, the next call went down to materials management suggesting, “how can we buy more from our GPO?” (and thus get bigger checks).
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