Some things are better in a group. When multiple dental practices band together, they can use their purchasing power to leverage better prices and purchasing terms from suppliers. A dental purchasing group or Group Purchasing Organization (GPO) allows your dental practice to save money on dental supplies. Your practice partners with other practices to order the same supplies from a company. Since you and the other members of the GPO order more than you would individually, the supplier is likely to give you a better price per item.
Several GPOs exist for dental practices. Take a look at some of the largest dental GPOs, learn more about what they offer, and find out how working with a GPO can help you save money on dental supplies.
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What is a GPO in Dental?
A GPO, or group purchasing organization, is a member-based organization or entity that relies on the buying power of its membership to get discounts from suppliers. GPOs are common in the health care industry and exist in other sectors, too. For example, farmers often form GPOs to negotiate better prices from the suppliers of raw materials and supplies. A group of farms is likely to need to order high volumes of seed or feed for livestock. Multiple farms are also expected to purchase high volumes of equipment.
It’s a similar situation in the healthcare industry. One medical practice typically won’t need to order high volumes of supplies, such as bandages or lancets. However, several practices in the same geographic area can band together and order supplies together. When multiple practices place a group order from a supplier, the supplier is more likely to provide a volume-based discount. One analysis estimated that GPOs could help the healthcare industry save between $392.2 billion and $864.4 billion from 2013 to 2022.
How GPOs Work
GPOs vary in terms of their size, the services they offer, and the industries they serve. There are three kinds of GPO, and a GPO’s type is determined by the industries served or the buying process:
- Horizontal GPO: Horizontal GPOs serve organizations across a range of industries. Often, horizontal GPOs provide practices and companies with services or products that aren’t specific to a particular industry. An example is a GPO that helps its members procure office supplies or housekeeping services. Some horizontal GPOs help members bring on temporary employees or maintenance services. Horizontal GPOs help smaller practices and businesses save money by reducing overhead costs.
- Vertical GPO: Vertical GPOs are typically industry-specific. While horizontal GPOs procure services and products that can be used across multiple industries, vertical GPOs focus on securing industry-specific products or services. A health care or dental GPO is an example of a vertical GPO. A dental GPO can help dental practices get a better price on films, polishing tools, and other dental equipment. In addition to assisting dental practices in purchasing equipment, a vertical GPO can also help it buy general items, such as office supplies.
- Master-Buyer GPO: In a master-buyer GPO, one practice or organization has a contract with vendors. Usually, the practice or organization is large, meaning it has the purchasing volume needed to get the best prices from vendors. The master-buyer organization lets smaller practices purchase from vendors using its contracts so that the smaller practices can take advantage of the discounts and other terms offered to the master-buyer.
One way to think of a GPO is as an intermediary between a dental practice and the vendor or supplier. The GPO works with suppliers or vendors to create contracts for supplies and services. The organization negotiates discounts and other terms on behalf of member organizations. It doesn’t purchase items or services itself.
Usually, the products purchased through a GPO are indirect. They are items or services a dental practice needs to continue to operate, such as vinyl or latex gloves, pens, and computer equipment.
GPOs save practices money but participating in one isn’t free. Something needs to fund the GPO, or it couldn’t continue to exist. GPOs get funding in a couple of ways. One is by charging a membership fee. When a dental practice joins a GPO, it pays a fee. Depending on the organization, the membership fee might be one-time, or it might be annual.
Along with the membership fee, many GPOs also charge administrative fees. These are fees a practice pays whenever it uses the GPO’s contract. A GPO might charge a flat administrative fee that’s the same for every arrangement, or the price might be based on the total cost of the contract. Even with fees, a dental practice is likely to find that joining a GPO helps save money.
How GPOs Help Dental Practices Save Money
The right dental buying group can help practices save time and improve profits by lowering the cost of supplies. Some of the benefits of joining a GPO include:
- Discounts on products and services: If you’ve ever stepped foot inside a Costco or Sam’s Club, you’re familiar with the concept of volume discounts. Buying a box of cereal that’s five times the size of a typical box means you pay less per ounce. If it’s a cereal you love and will eat, you can enjoy considerable savings. The same is true for dental equipment and other supplies needed to run your practice. A vendor will most likely charge you less per box of vinyl gloves if you buy 1,000 of them compared to buying 10 packs. Your practice might not need 1,000 boxes, but 10 different practices buying at the same time might.
- Better contracts: The price charged per item or service isn’t the only price you pay for procurement. When you join a GPO, you take advantage of strength in numbers, meaning better contract terms. You can boost your practice’s cash flow by joining a GPO that’s negotiated for net-60 payment terms, for instance.
- More predictability: When your practice joins a GPO or several GPOs, it is more likely to know what to expect than if it were to negotiate with vendors on its own. The contract terms are likely to be set, so you can feel confident that you’ll pay X amount for a particular product for as long as possible. Avoiding surprise price increases or other unexpected changes to the terms and conditions of your contracts means more significant cost savings. It also means you have more control over your practice’s cash flow and budget.
- Less time spent negotiating contracts: A GPO works with suppliers and vendors, managing and negotiating contracts on behalf of members. That means that you have more time to focus on building your dental practice and attracting new patients.
- Reduced risk: GPOs can be data-centric, meaning they collect ample amounts of data about their member’s buying practices. They leverage that data to negotiate better contracts and terms, lowering the risk for their members.
GPOs in the Dental Industry
Several dental GPOS exist. Each one varies in terms of what it offers practices and its overall size. Depending on the needs of your practice, you might find it worthwhile to join one or more dental purchasing groups. Take a look at a few of the more well-known GPOs in the dental industry.
Synergy Dental Partners
Dentists started Synergy Dental Partners in 2010. Its goal was to leverage purchasing power, helping owners of small dental practices save money. The GPO also aims to level the playing field, giving smaller practices access to prices usually only available to larger Dental Services Organizations (DSOs).
Unified Smiles works with dental practices at several stages in their lifecycles, offering operations management services, as well as opportunities to save money. The GPO has three tracks, including savings, solutions, and consulting.
United Dental Alliance
United Dental Alliance is another GPO created to help dental practices save money. The GPO makes purchase agreements for its member practices, which allow those practices to get reduced prices on the supplies and instruments they need.
Save Dentists was also started by a dentist who wasn’t satisfied with the prices he had to pay or the process of getting supplies and equipment. The dentist was also concerned about the future of independent dental practices. To develop a solution, the dentist partnered with other experts in the field, and Save Dentists GPO was born. The organization aims to reduce costs for independent dental practices by negotiating with vendors.
Dental Purchasing Group
Dental Purchasing Group was founded in 2013 and is the only dental GPO in the northeast for group or independent practices. It works with more than 20 vendors and aims to help its member practices grow. Along with assisting members to save on spending, the GPO helps to reduce payroll, insurance, and credit card processing costs.
Independent Dentist Network
Independent Dentist Network is another GPO that aims to give individual dental practices the ability to band together and leverage the purchasing power of a larger group. It claims to provide all its members with transparent pricing and the same price on all instruments and supplies.
BEST for Dentistry
BEST for Dentistry works to provide its member practices with benefits, such as lower prices, typically reserved for larger, corporate dental practices. Along with negotiating contracts with vendors, the organization also offers consulting services to members.
Services Dental GPOs Offer
The services offered by the top dental GPOs vary from organization to organization. Here’s a run-down of some of the things a GPO can do for your practice and a quick list of who offers what.
Purchasing and Cost-Savings
The service most likely to be offered by every dental GPO is attaining cost savings. A GPO works directly with vendors, creating service agreements and contracts that benefit member practices. Once your practice decides to join a GPO, it can order instruments and supplies from any vendors that work with the organization. Doing so means you can take advantage of the lower prices negotiated with those vendors by the GPO.
One thing to note is that different GPOs work with different vendors. Some GPOs only work with one or two vendors in specific categories, while others have agreements with multiple. Before agreeing to work with a GPO, ask to see its vendor list to ensure that the companies you want to purchase from are on it.
Another thing worth noting is how the GPO transfers the cost savings to you and its other members. In many cases, the transition is seamless. Using the contract negotiated by the GPO, you simply need to order from the vendor to receive the supplies you purchased for a discounted price.
The dental GPOs that offer cost-savings on equipment and supplies include:
- BEST for Dentistry
- Independent Dentist Network
- Save Dentists
- Unified Smiles
- Dental Purchasing Group
- Unified Dental Alliance
- Synergy Dental Partners
Some GPOs go above and beyond, offering your practice a range of professional services, in addition to negotiating contracts with vendors and suppliers. For example, BEST for Dentistry provides consulting services to help your practice smooth over any human resources issues or financial questions. The Independent Dentist Network offers practice management, as well as legal and human resources assistance. Unified Smiles assists with managing your practice’s staff and with retaining and finding new patients.
You and your team most likely need to complete a certain number of continuing education courses or credits annually to retain licensure. Continuing education can be among the services offered by a GPO. For example, BEST for Dentistry offers it from time to time, based on the needs of its member practices. United Dental Alliance also provides the option of continuing education credits and offers educational materials from its partner vendors.
Inventory and Practice Management
Some GPOs also offer assistance with helping your dental practice be the best it can be. In many cases, independent dentists, who understand how challenging it can be to compete in a world full of larger practices, start dental GPOs. The founders of some GPOs want to do whatever they can to help smaller practices succeed.
Unified Smiles offers inventory and practice management as a package that’s separate from its purchasing package. It can work with your practice to help you streamline your inventory to reduce waste and lower costs. It will also work with you to help you identify areas of potential growth for your dental practice.
BEST for Dentistry offers practice analytics that help you see where there is room for growth or improvement. You can use the analytics to work on boosting productivity.
GPO Pricing Models
GPOs make money in two ways. They charge their members fees for accessing their services, and some also charge the vendors they partner with a fee.
Pricing models can take multiple forms, from an upfront, one-time charge to a monthly or annual fee. Some of the pricing models available include:
- One-time fee: A GPO might charge one fee when your practice joins the organization. In some cases, the membership fee can be the only cost, or it can be in addition to a recurring fee.
- Monthly fee: Many GPOs offer a monthly fee option, and some offer multiple service tier levels based on how much your practice pays monthly.
- Annual fee: The same GPOs that offer a monthly fee also often accept a yearly fee. Usually, the annual fee (paid at once at the start of each 12 months) is slightly less than making 12 separate monthly payments. Some GPOs only offer a yearly fee option.
- Custom pricing: Depending on the services your practice needs, you might consider working with a GPO that offers a custom pricing option. With custom pricing, the GPO looks at what types of services your practice needs and gives you a quote based on those requirements.
Some GPOs also have a free option, but the services you get for free are limited. For example, BEST for Dentistry has a free member plan, but it doesn’t give you access to vendor contracts.
One thing worth noting is that many GPOs give you the option of trying out their services before committing. The free trial period typically ranges from 30 to 45 days, based on the organization. If you’re not sure what you need from a GPO or if working with one instead of another is worth the cost savings, it can be worthwhile to shop around and take advantage of the free trial offers before you commit to one or more organizations.
What Should You Look for in a GPO?
If you’ve decided that joining a GPO is an excellent way to help your practice save money and grow, there are some things to look for before signing up for one. It pays to shop around and try out different organizations to see which one is right for your practice. Another thing to keep in mind is that it might be in the best interest of your practice to join more than one GPO. As you weigh your options, here’s what to pay attention to.
Type of GPO
One of the first things to look for is whether the GPO is horizontal or vertical. If you’re specifically in the market for a GPO that specializes in the needs of dental practices, a vertical GPO is the way to go. On the other hand, a horizontal GPO can suffice if you want to save money on more general items, such as basic office supplies or cleaning services. Depending on your situation and the options available to you, you might find that working with both a vertical GPO and a horizontal one makes sense.
List of Vendors
GPOs create service agreements and contracts with vendors to pass on considerable savings to their members. Who those vendors or suppliers are is pretty important. The number of vendors that work with a GPO also matters.
When investigating dental GPOs, ask each organization to provide a list of its members. Some GPOs are open and forthcoming with the information and even publish their vendor lists on their websites. Others might make you hunt around or ask before they’ll give you their list.
Vendor quality matters, but so does quantity. Depending on your needs, you might prefer to work with a GPO that has a list of 50, 70, or more vendors rather than one with a list of 20 or 25 vendors. However, if the GPO with the short vendor list works with the companies you’re most interested in purchasing from, then that GPO could be your GPO of choice.
As noted above, a GPO can do so much more for your practice than help you get better prices on the equipment, instruments, and supplies you need. Some will also work with you to help you manage your practice, grow your practice or earn continuing education credits.
When reviewing the services available, it’s helpful to think about what your practice genuinely needs. It could be the case that, at this point, all you need is help to negotiate prices. You may already have your continuing education or practice management needs met. Since it can be easy to get wrapped up in the sales pitch, take some time to reflect on your needs. That way, you’ll avoid investing more money into your GPO membership than you need or want to pay for.
Speaking of payment, it’s also a good idea to consider your budget when looking for a GPO. The prices and pricing models vary considerably. It’s a good idea to ask yourself what you can afford to pay. In some cases, you might want to try out a free organization to understand how things work. You can always upgrade to a paid option later.
Another thing to consider is how the price of the GPO relates to the potential for cost savings. It might not be worth paying $99 per month for a service that will only save you $50 during that period. Look at what the organization claims to offer and the prices you can expect to pay for supplies and products once you join to see if your practice will benefit by saving money.
Take note of a GPO’s reputation. Ask your colleagues or owners of other dental practices if they work with a GPO and how they would rate them. It can also be worthwhile to read about the potential benefits of joining a GPO, such as studies that track how much money other practices with similar needs saved by participating in one.
Ideally, the GPO you decide to work with will be open and transparent with your practice about its policies and procedures. One thing to find out is if the GPO offers the same pricing to all members or if some members get preferential treatment. Another thing to note is how upfront the organization is about its vendor partners and the range of services it provides.
Finally, find out what your options are if you’re not satisfied with the organization. Does it offer a refund or money-back guarantee? Can you leave the organization at any time, or are you expected to sign a contract for a specific length of time?
How to Choose the Best GPO for Dentistry
Getting the basic details about dental GPOs will help you become familiar with what’s out there and your options. Once you have the basics down, it’s time to zero in and focus on the specific needs of your practice. Here’s what to do before choosing the best GPO for your practice:
- Do your research: The right GPO for you operates in your state. Some GPOs have limited geographic availability, so make sure you’re looking at organizations that work where you do.
- Think of your needs: Ideally, a GPO will have vendors that sell the instruments your practice needs or uses the most. Before you start looking, figure out the biggest spend areas for your practice. Then, look at what each GPO offers for those categories. If personal protective equipment is a pricey category for your practice, work with a GPO that has arranged for substantial discounts on gloves, masks, and other protective gear.
- Ask about ease-of-use: You want to get the discounts available to you as a GPO member, but you might not be so keen on jumping through several hoops to get them. With that in mind, some GPOs make the process of purchasing from vendors seamless. You don’t have to fill out complicated paperwork every time you buy or wait months to get a reimbursement check. Ask the GPO what the purchase process is like and whether it’ll be simple to get what you need.
- Calculate the cost: It might be the case that you get what you pay for when joining a GPO. Choosing the least expensive option isn’t always the best decision. Carefully reflect on your needs and evaluate the amount you might save when deciding how much is reasonable to pay for your membership.
- Figure out the transition: When you join a GPO, you most likely want the benefits to kick in ASAP. Find out how long it will take before you can start taking advantage of what the organization has to offer. It’s also a good idea to find out about the onboarding process in general. Will someone or something from the organization walk you through using it, or will you be expected to take care of the details on your own? Some GPOs might email you details, while others will call or even visit you in person to get you started.
How to Calculate ROI When Choosing a Dental Purchasing Group
If you’re going to start paying $100 per month or more to join a GPO, you most likely want to know when you’ll begin to see a return on investment (ROI). To calculate ROI, you’ll need to have an idea of how much the GPO costs you and what you’re likely to save by joining it.
Finding out how much you’re going to spend on a GPO is relatively simple. You can look at the price you’ll pay annually or the monthly fee multiplied by 12. For example, let’s say you decide to work with a GPO that charges an annual fee of $1,000.
The next step is to find out what you’re saving by being part of the GPO. Let’s say you joined this particular GPO because you want to reduce the amount you pay for personal protective equipment. Previously, your practice spent $100 on each case of vinyl gloves you purchased. In a typical year, you buy 15 cases of gloves for an annual cost of $1,500. The GPO gives you a discount of 10%, reducing your annual cost to $1,350. You’ve saved $150.
The GPO also promised to get you a great discount on dental anesthesia needles. The typical price you pay for needles is $25 for a box of 10. Each year, you go through 100 boxes of needles for a cost of $2,500. Joining the GPO means you get a 20% discount on the needles, reducing the price to $20 per box or to around $2,000 annually. You’ve saved $500.
So far, your annual savings are just $650. To calculate your ROI, you subtract the value of the investment, in this case, your annual fee ($1,000), from the amount you’ve saved ($650), getting you -$350. You then divide -350 by your investment ($1,000) and multiply by 100. That means your ROI at this point is -35%. You’ve lost money by joining the GPO. To break even, you’d need to find more ways to save on supplies or find a GPO that costs less or has better discounts.
How to Manage and Order Inventory Once Part of a GPO
Finding and joining the right GPO is just one way to help reduce how much your practice spends on necessary supplies, instruments and dental equipment. Keeping good track of your inventory is also part of the equation. You want to combine excellent prices on products with smart inventory management to help improve your practice’s bottom line, keep it in the black and avoid running out of the things your practice needs most.
What Is an Inventory Management System?
An inventory management system merges technology with your process to allow your practice to keep on top of its instruments and supplies. The goal of an inventory management system is to track the life cycle of the products your practice uses.
For example, you can use the system to log a new shipment of mouthwash. As each bottle of mouthwash gets opened and used, you can log that information in the system. Once the available stock level falls below a certain threshold, such as three bottles, the inventory management system can send you an alert that it’s time to reorder.
Although the exact features can vary from system to system, many inventory management programs include the following:
- Inventory optimization
- Stock notifications
- Supply grouping
- Stock lists
- Purchase order history
Using an inventory management system helps your practice avoid overspending on dental supplies and instruments. When you know exactly how much of a product you have on hand, you’re less likely to order too much of it. Knowing your stock levels and getting reminders when supplies are low also helps you avoid running out. You don’t want to be in the middle of a day full of appointments only to learn that you’ve run out of gloves or polishing paste.
How Does the Method Procurement Platform Work?
Method Procurement Platform can help you stay on top of your inventory. Using our software platform helps you streamline and automate the inventory ordering and management process. Your team won’t have to take time away from providing high-quality care to patients to ensure that the next shipment of vinyl gloves or anesthesia needles is on the way.
Here’s a quick look at how the platform works:
- Provides access to a comprehensive product catalog: If your dental practice uses it, it’s most likely in our product catalog, which has a database of half a million unique dental products.
- Offers integrated reordering: Never forget to reorder the supplies you need most. Method offers streamlined reordering from lists, ensuring that you won’t run out of the products you need most. You can send up auto-ordering to send purchase orders to your approved vendors automatically.
- Monitors your inventory stock: Handwritten reminders and “we’re almost out of!” texts messages can be a thing of the past. Our platform keeps tabs on your inventory levels, issuing low-stock alerts when the number of particular products falls below a certain threshold.
- Optimizes stock levels: How often does your practice run out of gloves or need to order new forceps? Method keeps track of stock levels and can help you manage reordering so that you never have too much or too little of the supplies you need.
Getting a handle on your dental practice’s inventory will help you enjoy further cost savings. Saving money and improving your practice’s cash flow means more than just getting the best price on the items you need and use most. It also means ensuring that the products you buy get used and don’t linger in the back of a supply closet or sit forgotten in a cabinet.
Using inventory management software also keeps you from having to throw out unused products. When you reduce waste, you spend less, leading to even greater cost savings.
Request a Demo Today
Once you’ve chosen the best GPO for your practice, it’s time to focus on getting your inventory management under control, so you can boost your ROI and get the most from your money. See how Method can make the process of ordering and managing inventory smooth and hassle-free. Request a demo of our platform today.