Group purchasing organizations provide independent practice owners with discounts on products and services, along with other benefits.
Viviana Burgos, the practice manager and co-owner of Eagle Fern Equine Hospital in Estacada, Oregon, knows that running a large clinic is expensive, but she instantly cut some bills when she joined The Veterinary Club about a decade ago.
“I had just purchased the practice and was trying to save every penny I could, but there are things you need to keep a business running,” Burgos said. “A GPO [group purchasing organization] is a great way to help. They are not just for the small animal clinics.”
By joining The Veterinary Club, a national GPO based in Middleburg, Virginia, Burgos saved money in numerous categories. She received 22% off her Verizon phone bill, plus big discounts at Office Depot and on the purchase of radiation badges and diagnostic equipment.
“We have a 50% discount on paint at Sherwin-Williams, so we took advantage of that several times and keep the clinic looking good,” she said. “You can also save some money on credit card processing fees. Every little bit counts so that we can be more profitable and spend more on the clinic.”
Burgos, who owns Eagle Fern with her veterinarian husband, David Asmar, DVM, is among the thousands of veterinary GPO members. Fewer than 10 such organizations operate across the United States.
Essentially, a GPO brings practice owners together as a large entity that negotiates prices and terms with distributors, manufacturers and service providers. Independent and small-chain practice owners are able to narrow the gap with the meganetworks, which commonly enjoy bulk discounts.
“A GPO helps organizations … realize savings and efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors and other vendors,” said Bryan Benitz, managing partner of The Veterinary Club. “We can help organizations with contracting and sourcing on strategic categories that may or may not be covered under an existing contractual agreement.”
AAHA, VHA and TVC
The American Animal Hospital Association started a GPO program, AAHA Advantage, in 2017.
“By helping AAHA-accredited practices become more financially sound and giving them access to the products and services they use daily, AAHA provides its members with the tools and savings necessary to be successful in delivering excellent care for their patients,” said Nathan Chambers, the association’s strategic business manager.
AAHA Advantage, like all GPOs, negotiates exclusive discounts, preferred pricing and rebates from vendors and passes the savings on to members.
The Veterinary Hospitals Association, which started in 1984, is the oldest veterinary GPO. Jeff Benson, executive director of the Minnesota-based VHA, considers it a hybrid group purchasing organization, with 415 member clinics, a warehouse with drivers and vans, and an onsite pet crematory.
“About five years ago, we started a business services division and can provide clinics with bookkeeping, payroll, social media marketing programs, recruiting and financial support,” Benson said. “We try and cover a little bit of everything. We have about 2,000 SKUs in our warehouse, and the rest we get from distributor partners.”
VHA partners with three distributors. Members can place an order and have it delivered from the warehouse or drop-shipped from the distributor.
“We’re not just product-based. We have business service support and our own staff, so you can call us and ask questions,” Benson said. “Vets have to decide if they want [a GPO] more full-service oriented or not.”
The Veterinary Cooperative, founded in 2012, doesn’t do any warehousing but does offer discounts and rebates to its 4,000 members.
“Our key differentiator has to do with the term ‘cooperative,’” said Nick McCart, vice president of the Evanston, Illinois-based TVC. “All the profit that our organization makes is returned to the owners, so that’s different than our friends at the other GPOs. We have returned millions of dollars in profits over the years to our hospitals.”
TVC members pay a one-time, lifetime fee that grants access to discounts and dividends. TVC also offers business training as well as a members-only conference and free continuing education.
Evening the Playing Field
GPO leaders noted that membership isn’t all about finding great prices and discounts. Those can change constantly.
“GPOs and cooperatives exist to even the playing field for independent businesses against a continual corporatization of the business landscape in the U.S.,” said Steven Manyak, DVM, the owner of Pine Animal Hospital in Long Beach, California.
Dr. Manyak, a member of The Veterinary Club, said all the organizations do a lot of good.
“It’s been an important part of our success as it’s helped keep costs down and allowed us more time to focus on what we need to focus on,” he said.
Rolando “Ro” Pansoy Jr., the manager of purchasing and inventory at SAGE Veterinary Centers in Northern California, counts four key benefits of joining a GPO:
- The ability to benchmark prices on goods and services.
- Checks and balances to ensure a vendor is honoring GPO-contracted prices.
- Time and labor savings by not having to negotiate prices by yourself.
- Better controls on pricing changes.
“There’s a direct connection to manufacturers regardless of the distribution,” Pansoy said.
Joining a GPO is a no-brainer, the VHA’s Benson said.
“Every GPO is in the same boat,” he said. “We’re all trying to give better benefits and better pricing.”
A Multiple-Choice Option
Some veterinarians join more than one GPO and then price-shop, thinking multiple groups will offer different savings at different times.
“We see it all the time,” Benson said. “We don’t see it as a great thing to do because you’ll be paying a membership fee for multiple organizations and the pricing is going to be generally equivalent, especially for the major manufacturers and major pharmaceutical companies.
“One GPO may be cheaper on these 50 products and someone else will be cheaper on those 50 products by a few cents,” he said. “You put it all in the wash and at the end of the day it will be very little difference.”
In some cases, a manufacturer will require a veterinary clinic to align with one GPO so that member rebates are properly managed.
“We do not recommend practices join more than one GPO, but it is up to them,” AAHA Advantage’s Chambers said. “We advise practices to compare GPOs’ vendors, pricing and services and make the best decision for themselves. AAHA-accredited practices have access to over 40 vendors within our member savings programs. Vendors include but are not limited to nutrition, compounded medications, medical products, ultrasound devices, supplements and pharmaceuticals.”
Anyone who finds a cheaper price at another group purchasing organization should call their current GPO and ask that the variance be researched and that the better deal be matched, Benson said.
Many members of The Veterinary Cooperative join more than one GPO, McCart said. He thinks that makes a lot of sense.
“We are maturing as an industry and that means there will be some who choose to be part of multiple groups,” he said. “We all want to help independent businesses thrive.”
Keith Loria is an award-winning journalist who has written for major publications on topics as diverse as veterinary medicine, travel and entertainment. He started his career with The Associated Press and has held editorial positions at publications aimed at health care, sports and technology. When not busy writing, he can be found playing with his daughters, Jordan and Cassidy.
- Members: Over 1,000
- Vendors: More than 40
- Established: 2017
- Membership qualification: AAHA-accredited practice
- Information: bit.ly/2CJMgX7
The Veterinary Club
- Members: 6,000-plus
- Vendors: 450
- Established: 2009
- Membership qualification: Veterinarian-owned practice
- Information: theveterinaryclub.com
The Veterinary Cooperative
- Members: 4,000
- Vendors: 80
- Established: 2012
- Membership qualification: Hospital owned primarily by a veterinarian
- Information: tvc.coop
Veterinary Hospitals Association
- Members: 415
- Vendors: “We have access to everything.”
- Established: 1984
- Membership qualification: Veterinarian-owned practice for full membership
- Information: veterinaryha.org
Other group purchasing organizations