BUSINESS

Physicians explore group purchasing as a way to cut costs

There are options aplenty for interested doctors, from private companies to society-sponsored discount programs.

By Mike Norbut, AMNews staff. Feb. 9, 2004.

As a way to generate more revenue and encourage membership growth, the Metropolitan Medical Society of Greater Kansas City recently established a for-profit subsidiary designed to provide additional practice management services to physicians.

The company, Metro Med Inc., plans to provide a full range of services in time, but organizers are hoping to make a big splash by focusing on one way to make a universal financial impact: group purchasing agreements.

"The company's been up for 10 days, and we've already received plenty of phone calls," Sukumar Ethirajan, MD, an oncologist in Overland Park, Kan., and president of the medical society, said in mid-January. "The early interest is significant because doctors don't usually jump on board that fast."

With the economics of practicing medicine continuing to tilt against physicians, more doctors are looking for ways to achieve greater efficiency through cutting their own costs. Rather than combing through sales papers for deals on office supplies and spending hours trying to negotiate a price on a piece of medical equipment, some doctors have rediscovered the group purchasing concept.

By banding together, physicians can build purchasing power, which can lead to volume discounts on products. The larger purchasing body also might qualify for other vendor perks, such as training sessions for equipment or telephone support.

Meanwhile, attorneys say the idea generally is legally upstanding because theoretically, individual practices can achieve greater efficiencies through group purchasing, which will benefit the patient.

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