EMS agencies are all too familiar with the new mantra of our times—”Do more, with less.” But saving money while still maintaining a level of service Americans have become accustomed to is critical, not just for continued success, but also survival.
And because the costs of equipment and supplies, not to mention fuel, only continue to rise, and revenue seems to be in constant decline, EMS agencies are turning to group purchasing organizations (GPOs) and cooperatives to save money on capital purchases and more.
Bill Mears, vice president of A-TEC Ambulance, Inc., based in Elgin, IL, used to think his organization got great pricing negotiating purchases on everything from vehicles to medical supplies on its own. That was up until a year ago when, through A-TEC’s relationship with Catalyst Insurance, Mears met with representatives from EMS Redline, a GPO serving more than 60 EMS and patient transport providers nationally. After joining with EMS Redline, A-TEC was able to get an additional $10,000 discount per vehicle on three new ambulances.
“Our second purchase was oxygen,” Mears says. “We took our oxygen bills from the previous year, which were just over $50,000, and gave them to a company called Airgas through EMS Redline. With the EMS Redline pricing, and the exact same amount of oxygen and way of doing things, we saved an estimated $25,000 on the first year based upon what we paid previously.”
What Are GPOs?
The idea for healthcare group purchasing organizations is more than a century old, but the number of healthcare GPOs experienced a dramatic increase in 1986 when Congress granted healthcare GPOs “safe harbor” from federal statutes prohibiting kickbacks.
The cost structure among GPOs varies. Many GPOs charge members an annual membership fee. Members may see their savings up front on purchases or through rebates after purchase. And GPOs often receive ongoing funding through a return, ranging from 1%–3%, on the purchase of equipment and supplies from the vendors they negotiate contracts with.
While the number of GPOs and group buying co-ops exclusively serving the EMS market nationwide is growing, there are still relatively few “big” players.
The North Central EMS Cooperative (NCEMSC) based in St. Cloud, MN, is one familiar name. Started in 1997 with just three member ambulance services, it has grown to represent 4,285 members in 49 U.S. states, as well as Canada, Mexico and Colombia.
Other large GPOs include National Purchasing Partners, First Choice Cooperative and FireRescue GPO.
According to EMS Redline President Tim Onderlinde, who’s been involved in EMS for more than 35 years, the Michigan company began just three years ago, but it already boasts members across the country.
In talking with a counterpart in California a few years ago, Onderlinde says, he realized other agencies were paying more for ambulances and other large capital equipment purchases than he was, but less for medical supplies.
“We thought we ought to sit down and see if there’s a way we could form a group that could share information and go to the vendors and say, ‘We want to even the pricing structure out coast to coast,’” Onderlinde says. “Regardless of where you’re located in the country, we’re all buying the same type of products—everyday needs and capital needs—so let’s form a group to negotiate pricing.”
Now EMS Redline members have access to not only its network of over 100 vendors, but also to the more than 2,500 member health systems that are part of top national GPO Premier.
For a $500 annual fee, EMS Redline members can leverage the best prices on equipment and supplies, Onderlinde says. Members see savings of anywhere from 30%–40% on the medical supply side, as well as significant savings elsewhere. And, Onderlinde says, members have access to “everything from Band-Aids to ambulances,” making EMS Redline’s online ordering portal essentially a one-stop place to order everything an agency needs need to operate its business.