How to improve your practice's vaccine procurement process
During the early 1990s, our world of medical practice took a drastic turn. Managed care was introduced, and physicians found themselves in the position of having to accept insurance company contracts with significant discount rates. As a pediatric practice, running on a tight budget, it was difficult to imagine how we could function properly under these new financial constraints. Local pediatric practices met and discussed our common problems. Physicians, nurses and managers contributed their “best practice” solutions. From these initial meetings, a community developed, based on cooperative solutions for the common good.
One significant problem practices shared was their inability, to qualify individually for the highest level of vaccine discounts, which were based on quantity. These discounts, extended only to exceptionally large practices, amounted to many dollars per dose. Vaccine purchase was a significant part of our budget at that time, and now for many pediatricians, vaccine cost is their largest expense, exceeding staff payroll.
After negotiating with the vaccine manufacturers, our small community became the first group purchasing organization (GPO) for vaccines. Pediatric Federation LLC was born. Manufacturers recognized our organization as one customer, and we were able to extend the large practice discounts to all participating practices, no matter its individual size. In exchange for these significant discounts, we promised to purchase our vaccine from contracted manufacturers.
Our organization now extends across the country, spread largely by word-of-mouth recommendations. Pediatric Federation follows a three-year bidding schedule, extending bid requests to all vaccine manufacturers. Our advisory board carefully reviews science, pipeline and financials. Bid information is submitted to all participating practices and we vote on which suppliers we use. We cooperate to achieve the greatest discounts, and unspent GPO administrative fees are returned to our participating practices, making for a significant, additional discount to members’ costs. This important benefit of our GPO distinguishes us from similar organizations.