GPO pricing for the practices your ACO does not own

GPO pricing for the practices your ACO does not own

There is a structural gap in almost every purchasing program sold to accountable care organizations, and once you see it you cannot unsee it.

You are accountable for the total cost of care across your attributed population. Your network includes practices you own and practices you do not. The independent practices are frequently the majority, and they generate a large share of the spending you are measured on.

Then you go to set up group purchasing, and the program prices you on what you own.

The owned entities get contract pricing. The independent practices, the ones whose performance lands on your financial results, get treated as unrelated third parties. They buy at whatever they were buying at before, which is to say retail.

Why programs are built this way

It is not malice. It is inheritance.

Group purchasing grew up around hospitals and health systems, where the buyer and the balance sheet were the same thing. Membership followed ownership because ownership was the only structure that existed. When a system acquired a practice, that practice came onto the contract. Clean.

Value based care broke that assumption without anyone updating the purchasing model. An ACO is not an owner. The Medicare Shared Savings Program describes ACOs as groups of doctors, hospitals, and other health care providers who collaborate to give coordinated care (CMS). Collaborate, not own. The financial accountability is real and the ownership is not, and purchasing programs kept underwriting the ownership.

The result is that the entities carrying the most risk have the least ability to extend the benefit of scale to the practices creating that risk.

The scale you are leaving on the table

Think about forty independent practices in a network. Under the ownership model they are forty separate small buyers, each negotiating alone, each with no leverage worth the name.

Counted as one buyer, they are a book of business. Not because anything about them changed, but because someone finally aggregated them.

This is not a theoretical point. The 2025 Journal of Public Economics study found that the scale of the purchasing group itself drives the savings. A one standard deviation increase in the scale of a hospital's GPO reduced supply expenses per discharge by 2.7 percent (Journal of Public Economics). Scale is the variable. When you exclude the independent practices from the count, you are shrinking your own scale and then paying the price that smaller scale earns.

There is a second effect that matters more over time. A network that is counted as one buyer becomes a negotiating position of its own, separate from whatever national contract it sits under. That is leverage you do not have when your network is a collection of strangers on paper.

The legal structures already assume this

Independent practices contracting together is not a novel idea that needs inventing. It is the foundation of the structures you already operate.

Clinically integrated networks and accountable care organizations exist specifically so that otherwise independent providers can act jointly without running into the antitrust rules against price fixing (Milbank Memorial Fund). That is the entire point of the legal architecture. Practices remain independent and act as a unit for defined purposes.

Purchasing is a defined purpose. It is arguably the simplest one, because unlike payer negotiation, nobody's clinical autonomy is on the line. A practice that buys gloves at a better price has not surrendered anything.

What actually has to be true

For a network to bring in practices it does not own, three things have to hold.

Participation has to be genuinely voluntary at every level. A practice cannot be enrolled because its parent organization signed something. It has to sign for itself and it has to be able to withdraw on notice, without penalty. This is not a courtesy. It is what keeps the arrangement clean, since GPO contracts are voluntary by design and providers can always buy off contract (HSCA).

Joining has to cost nothing. The moment there is a fee, you have created a reason for the practices with the thinnest margins to opt out, and those are frequently the practices whose costs you most need to move.

The independent practices have to reach the same contract pricing, not a lesser tier. A program that gives owned entities the real price and independent practices a courtesy discount has not solved the problem. It has documented it.

Why this matters more every year

The number of practices operating inside accountable care arrangements keeps climbing. CMS estimated that 14.3 million Medicare beneficiaries would receive care coordinated by an ACO in January 2026, up from 13.7 million the year before, with 511 Shared Savings Program ACOs representing more than 700,000 health care providers and organizations (CMS).

Every one of those arrangements asks the participants to spend less and perform better at the same time. Supply cost is the least painful place to find money, because reducing it requires nobody to change a clinical decision. It is strange that it is so often the last place anyone looks.

If you want to understand the underlying mechanism first, start with what a group purchasing organization actually does. If you already know and you want to talk about your own network, start with a question.