Medtech companies have long had a complicated relationship with group purchasing organizations (GPOs), especially the national GPOs. GPOs offer opportunity for greater market coverage and efficient contracting, both of which benefit medtechs and their provider customers. At the same time, there is pervasive and not-so-subtle grumbling about the marketplace influence GPOs can wield and the level of reciprocal value realized by medtech companies.
Despite these misgivings, medtechs continue to “grin and bear it.” This is due in part to long entrenched practices, as well as a fear of retaliation from GPOs who can limit market access. These fears are supported by high profile attempts at disintermediation by Medtronic and GE Healthcare over the last decade that ultimately washed out.
But like many other dynamics in healthcare, the interplay between GPOs and medtechs is poised for change. Health systems are becoming increasingly sophisticated, taking more control of their supply chains and becoming more demanding toward their supply chain partners. The once collegial member community of GPOs is becoming increasingly transactional, with GPOs shifting focus and member engagement models. How a medtech should respond is a nuanced question, but the opportunity for change is at hand.
This Executive Insights examines the traditional relationships between GPOs and medtechs and why now may be a good time for medtechs to reshape their GPO strategies.