The future for healthcare capital investments.

Hospitals have entered into a new era of capital planning. A number of factors will influence hospital buying behavior now that the Medicare capital regulations are being implemented. As purchasing responsibility for additional departments is continually folded into hospitals' central purchasing function there will be increased opportunities for group contracts. As resources shrink and demand for services increases, GPOs will be relied upon for their expertise and financial finesse. The emphasis will be on boosting the use of group contracts among existing members, rather then seeking additional members in a shrinking hospital market. Through effective purchasing, it is generally recognized that a hospital can recover and keep, at best, 5-10 percent of the cost of all purchased goods and services. Group purchasing organizations need to develop better strategies of cooperation with vendors, distributors and hospitals to help providers control capital costs. In this challenging environment, GPOs will aggressively target markets other than acute care as the source of their future growth, just as healthcare facilities are branching out. To accommodate changing needs, the strongest GPOs will continue their evolution into structures more like alliances, offering an array of other cooperative and support programs beyond the purchase of goods and services.