Testing the GPO waters: as competition for your business continues to increase, it may be tempting to abandon your group purchasing organization for a competitor. However, it's important to consider whether the savings presented can actually be realized

Healthcare Financial Management, June, 2004 by Martha A. Dula

17. Audit size. Make sure the size of the audit is reasonable. The old 80/20 rule works: 80 percent of a hospital's product volume/cost is accounted for in about 20 percent of the products it buys, excluding capital equipment.

AT A GLANCE

When deciding whether to switch to a new group purchasing organization (GPO), consider the context of the opportunity presented, the experience and character of those associated with the new GPO, contract terms that can affect savings, and how savings will be measured.

GET WISE ON SUPPLIES

The Healthcare Supply Chain 2002 Survey Results To read this report analyzing the current state of supply chain management in the healthcare industry and identifying leading practices, go to www.hfma.org/ resource/focus areas/scsurvey.pdf.

Resource Management Update: Healthcare Supply Chain To read this paper by McKesson & HFMA that identifies areas of cost savings and process improvements in the supply chain area, go to www.hfma. org/resource/focus_ areas/supplychain.pdf.

ARE YOUR EXPECTATIONS REALISTIC?

Some financial managers are so desperate to reduce operating costs that they become gullible to promises of product pricing savings of between 10 and 15 percent. Is it time for your next reality check? Basic business acumen should indicate these are probably unrealistic claims.

Martha A. Dula is president and CEO, HSNE, Inc., Quincy, Mass.

Questions or comments about this article may be sent to the author at mdula@hsne.com.