Your GPO Is Not a Strategy: How to Build a Supply Chain Contracting Approach That Works
Many health systems rely on GPOs as a pricing tool, but without a deliberate contracting strategy, you risk leaving value on the table.
For many healthcare organizations, the group purchasing organization (GPO) relationship functions as a default response to rising supply costs: pricing pressure emerges, leadership asks about contracting, and someone points to the GPO as the answer.
A GPO is a tool. A powerful one, with real leverage and genuine value, but a tool nonetheless. Using it as a default pricing control mechanism without a deliberate strategy underneath it can lead to missed opportunities. And in a cost environment as fluid as 2026, defaulting to the GPO without a clear-eyed view of what you actually need from it is a risk healthcare organizations can’t afford.
This is the final installment in a three-part series on supply chain strategy, developed from our recent webinar: From Volatility to Value: Strategic Supply Chain Priorities in 2026.
The GPO Landscape
The national GPO market has consolidated to three primary players, with a range of regional organizations beneath them, many of which are underpinned by those same national firms, though with more specialized focus areas (regional networks, academic medical centers).
These national and regional organizations are not interchangeable. Each differs in terms of contract portfolio, technology offerings, and the additional services they bring to customers. Treating them as interchangeable or selecting one without a clear framework for comparison can leave value on the table.
Build a GPO Strategy
These differences make GPO selection a more nuanced decision than it’s often treated, and yet many organizations still approach GPOs as a default pricing tool: we want better pricing, they have scale, so let’s use one of them to get the best price.
But pricing is only one dimension. A real GPO strategy starts with clearly defining what your organization needs holistically. That can include asking questions like:
- How does our acute-to-non-acute mix impact what we need from a GPO, and can a single partner support both?
- Do we need best unit pricing at the product level, or do we need broader capabilities like technology or service support?
- Which categories are we willing to commit volume in to drive value, and where do we need to maintain flexibility?
Once you’ve defined those needs, you can evaluate GPO options against them, breaking out contract needs from technology needs from service needs, and comparing apples to apples across GPOs that are quite different once you look closely. The goal is a deliberate match between what your organization requires and what the GPO can deliver.
Understanding GPO Contract Vehicles
Within a GPO relationship, there are more contract vehicles available than many organizations realize. Understanding the full menu helps you identify which options are most advantageous.
National contract portfolios are usually table stakes for most contracts, with tier pricing based on your volume and spend qualifications. If you’re treating the national portfolio as your contracting endpoint, you could be leaving money on the table.
Local tiers are another option within GPO contracting. If you have pricing that outperforms the national portfolio, or the volume or spend to support it, you can work with your GPO to establish a local tier that reflects those terms. Most GPOs allow this.
Committed programs within a GPO deserve careful evaluation. These programs can be winners or losers depending on how they are structured, so it’s important to assess whether the full set of commitments will be advantageous for your organization in total. If you can commit to the volume but not all the contract terms, it’s often possible to work directly with the supplier to achieve similar pricing.
Membership agreements may also be possible. Most GPOs will allow you to tie a direct agreement to a national contract for the purpose of admin fee collection. Worth knowing this exists, worth asking about.
One point on contract language: in 2026, with tariff volatility, fuel surcharge insertions, and escalation clauses showing up routinely in supplier contracts, the terms inside GPO agreements matter as much as the pricing. If your organization has representation on GPO product committees, pay close attention to what’s being built into those agreements.
Value-Based Contracting in Healthcare
The most forward-looking shift in healthcare supply chain contracting is the move from unit price agreements to value-based ones. The organizations building these capabilities early will have an advantage as the market matures.
Value-based contracting in healthcare means building clinical outcomes, operational performance, and supply assurance into the agreement itself. Instead of paying purely for volume or unit price, you structure agreements around how well a product or service performs against defined outcomes.
In practice, this can look like outcomes guarantees, total cost-per-episode bundles, service level guarantees with meaningful consequences, risk-sharing arrangements, or utilization management contracts. At the leading edge, it extends to innovation collaboration and co-development agreements with strategic suppliers.
The key question then becomes: if you are building a value-based partnership rather than a purely transactional arrangement with a supplier, what does that agreement actually look like in practice, and how do you structure it so both parties can benefit?
The Portfolio Audit
Underneath all of this is a foundational discipline that many organizations don’t revisit often enough: a full contract portfolio audit. Every one to two years, it’s worth stepping back and asking:
- Who are we buying from?
- What types of contracts do we have?
- Are we on the right tiers within those GPO arrangements?
- Are we getting the total value we expected?
The audit isn’t just about finding savings opportunities, though it usually does. It’s about having an accurate picture of your GPO strategy and ensuring the contracting system reflects current needs, defined expectations, and the performance of suppliers across the portfolio.
Importantly, the audit also creates the foundation for next steps. With a clear view of the current portfolio, you can then ask: what should our arrangements look like going forward?
Align Before You Negotiate
That conversation belongs before the request for proposal (RFP).
What do you want from each supplier relationship—not just today, but in three years? What service levels are non-negotiable? What KPIs truly matter? What have you done with other suppliers that you can bring into this new agreement? And what does a true partnership look like versus a transactional agreement?
When stakeholders work through those questions before sourcing begins, requirements are already defined before the RFP is ever issued, and the RFP becomes execution rather than discovery.
A final note: Organizations that enter sourcing with both a defined destination and lessons from past performance are fundamentally better positioned to negotiate value.
Capturing Value Through GPO Strategy
The organizations that perform best treat contracting as intentional design: matching structures to clearly defined needs, recalibrating as those needs evolve, and building toward agreements that reflect outcomes rather than just price. A deliberate GPO strategy is where that work begins.
Ready to build a supply chain contracting strategy that goes beyond the GPO?
Acuvance Coker partners with hospitals and health systems to design deliberate contracting frameworks, evaluate GPO relationships, and structure agreements that reflect organizational needs, not just pricing defaults.
→ Read Part 1: Supply Chain Blog Series Intro
