Responding to the inefficiencies of the supply chain by aggregating provider purchasing volume, GPOs have become the powerhouses of the supply chain.  Largely non-profit, a GPO may be structured as an affiliate organization, to which members pay a nominal fee to join and an ongoing annual fee, or as a shareholder organization, where the cost of membership is based on the size of the provider.  GPOs derive the majority of their revenues from administrative fees from manufacturers and distributors.  Currently seven national GPOs control 90% of all medical supply contracts. While GPOs effectively reduce the cost of sales for manufacturers, they have also eroded margins for many manufacturers. 

GPO Issues:

• inability to control member contract compliance
• growing dissatisfaction with service, primarily among manufacturers and distributors
  
  

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GPOs have to evolve into supply chain management companies helping their customers become more efficient - from acquisition to consumption - or they risk extinction in the next 10 years.  The real challenge to GPOs in achieving this goal is distributors.  Essentially, the first stakeholder to the finish line wins; and only time will tell.