A group purchasing organization award is not a single hospital bid, it is a national or regional agreement that many hospitals then buy off. Understanding how the award works decides how a laundry equipment supplier pursues it.
How the award works
A group purchasing organization runs a competitive process to award supplier agreements for a category, then publishes the awarded suppliers to its members. Member hospitals buy off the agreement at the negotiated terms, sometimes choosing among awarded suppliers, sometimes at set tiers.
What decides the opportunity
The agreement competition decides whether a supplier is on the contract at all, and the member level choice decides the individual orders. The agent flags the agreement opportunities and reads the member solicitations that reference a group purchasing organization so a supplier sees both levels.
The Steps From Bid Calendar to Member Purchase
Vizient describes its contracting as a competitive process that follows the principles of the ABA Model Procurement Code. Its bids are posted publicly, any supplier can register to receive a request for proposal, and proposals are scored on qualitative and quantitative factors that member organizations agreed to during the process. Vizient tells suppliers to watch its public bid calendar and to register for every product or service category that applies to them.
| Stage | What happens | What the supplier does |
|---|---|---|
| Bid calendar | The GPO lists the categories scheduled for competitive procurement | Registers for the laundry equipment categories before the request for proposal opens |
| Request for proposal | Registered suppliers receive the request and submit a proposal | Submits pricing and product data that members can compare |
| Evaluation and award | Proposals are scored on factors agreed with members, and agreements go to the best overall value | Learns whether it holds an agreement |
| Grievance window | Vizient runs a vendor grievance process for suppliers who believe the process was not fair, open, and competitive | Decides whether to appeal an award |
| Member purchase | Member hospitals buy at the agreement terms | Wins or loses each order on the local solicitation |
Money moves in a way that affects the price. GPOs are usually paid an administrative fee by the supplier, and Ropes and Gray reports that the fee is almost always a percentage of the purchase price. Under 42 CFR 1001.952(j), the GPO safe harbor under the Anti Kickback Statute, that fee is protected when the safe harbor conditions are met, and the HHS Office of Inspector General has described the safe harbor as covering payments from a vendor to a GPO. Because the fee is a percentage of every member sale, it belongs in the price model before the proposal is submitted.
The bottom line: the agreement is won once at the bid calendar and request for proposal stage, and the revenue is earned order by order afterward, with a fee taken from each sale. Our agent tracks both, so a laundry equipment supplier sees the category bid opening early and the member purchases that cite the agreement later.
How the agent handles it
Our agent tracks the group purchasing organization agreement opportunities and the member buys that reference them, separates the national agreement from the local order, and scores both against your lines and your agreement position.
The agent reads both levels of a group purchasing organization award, the agreement and the member buy. See the healthcare and GPO laundry bid agent in the interactive demo.