When Jeff Cohen, Una's VP of Emerging Markets, visits a med spa or another small practice in the subacute healthcare space, his eyes immediately scan for a tell-tale sign: stacks of Amazon boxes piled in the store room, some still taped shut, others spilling over with miscellaneous supplies.
Jeff knows this is a physical clue that a small healthcare practice is not managing its shipping purchasing well, and can probably use some help in several other categories.
Subacute Healthcare Purchasing
The subacute healthcare sector encompasses small, niche practices, like med spas offering Botox and fillers, concierge medicine providing personalized care, or functional medicine practices focusing on holistic wellness. These aren't massive operations with dedicated procurement teams.
As Jeff explained in a recent Art of Procurement webinar, “They usually have one individual who handles everything. In many cases, it could be the owner of the practice who's doing all the purchasing, or it could be a spouse, or an office manager. They're really just looking to ensure that they have what they need at the right time so that their practitioners can get through the day and see all the patients.”
These practices thrive on a fee-for-service model, where the focus is on delivering treatments like neurotoxins or wellness therapies. Revenue comes from patient visits, but as Jeff points out:
“They can make a lot more money if they're managing their spend properly.
But because their whole day is around scheduling and calling patients to make sure they're coming and rescheduling and all of those different things, there’s just not enough time in the day to do their supply ordering in a more rational format that would allow them to shop around, work with a group purchasing organization, or find alternate means of looking for savings."
It's a high-touch, service-oriented world where time is the scarcest resource, and poor spend management can quietly erode profits.
Mastering Subacute Healthcare Spend Management
Below, we share Jeff’s seven key insights into mastering spend management for practices looking to optimize without overhauling their daily operations.
1: The Amazon Boxes in the Back Room
The first red flag? Those ubiquitous cardboard boxes from Amazon or wholesale clubs cluttering the storage area. Jeff uses this as a starting point in his assessments:
"Do you see a lot of cardboard boxes? Do you see a lot of stuff from a wholesale club? This is a symptom. What are they ordering? They just buy out of convenience. They do what they've been doing for a long time, and it works for them.
But as soon as I bring up ways to save money, they're kind of like, ‘I've never thought of that before!’ Or they know it's out there and have never taken the time to follow through with it."
Jeff shares a striking example of how a group purchasing organization (GPO) can turn this around:
"At one practice, they do a lot of mobile work, whether PCP, primary care physicians, or nurses. I reached out to them and asked, ‘Hey, I know you do a lot of shipping. When you were set up with your shipper, did they assign you an account rep? Do you have a contract?’
And shockingly, as much as they spend, which annualized was upwards of $800,000 a year, just in one-day overnight and two-day shipping, they said no. They didn't know there was an option. They simply set up an account on FedEx, used by all the people in their business who are shipping things. They gave me several months’ worth of data.
We ran an analysis and found that even when staying with the same shipper, they're able to cut that spend more than by more than 52% by joining a GPO."
Interested in running your own shipping cost analysis? Use Una's free shipping calculator tool!
2: Securing Better Deals on Sector-Specific Supplies
In subacute care, it's the everyday essentials that add up. Jeff dives deep:
“This isn’t about purchasing extremely technical specialist medical equipment like a hospital would need. This is about the very high-volume items that everyone needs: your medical surgical supplies, typical things like gauze pads, cotton balls, sutures, and all the different things that you would need for the practice.
Specifically with med spas, a lot of these folks are buying the neurotoxins; Botox, Dysport, things like that. You have a lot of practices getting into alternative medicine and purchasing semi-glutides, GLP-1s, peptides, all those different things. Every office has computers and needs software security, IT support. Also, office supplies! Everybody's needing pens and paper and binders and all of those different things."
In all, there are at least 10 to 12 distinct categories in the subacute healthcare space that can yield significant savings opportunities by partnering with a GPO if you spend the time to roll up your sleeves and dig in.
3: The Risks of Ignoring Spend Management
In an industry where service fees don't keep pace with rising costs, unchecked spend can quietly erode viability. Failing to manage spend can threaten a practice's survival. Jeff warns:
"The biggest risk is eroding your profit margin. The costs of everything continues to go up, but the cost of the services that you're providing seem to rise disproportionately slower than the overall cost. If the CPI for a year is 4% and you're making whatever you make on a salary standpoint, two or three years later, you're still here, but your costs continue to go up."
Profit margin erosion can be the difference between keeping your doors open or closing down - having help managing all those things can really make a difference for practices.
4: What a Good GPO Really Offers
Not all GPOs are created equal. Jeff describes the value of a top-tier one:
"Most GPOs offer hundreds and thousands of contracts, potentially, for these practices to dip into. However, a good GPO is going to do much more than just say, ‘Okay, here's our list of 2,000 contracts. Let us know what you want to use. We'll turn it on, then send you the links to their website and you can go buy all the stuff that you want to buy.’
A good GPO, through discovery, is going to understand what you are buying, where you are currently buying it from, and what changes you are open to. Do you want to stay with some vendors? Are you willing to move? Then they’ll show you the opportunities.”
In the beginning they will help tackle low-hanging fruit, whether it's the medical or office supplies. But as time goes on and those practices start seeing a decrease in their supply spend, that's when a good GPO is going to come back in and ask: ‘What are you doing in IT support? What about your credit card machine? What fees are you paying?’ And you really build a relationship. Top GPOs will introduce you to vendor partners. And the best GPOs are 100% free for members.”
5: Overcoming Common Pushbacks
Pushback is common, but Jeff addresses it head-on.
"Here’s the first pushback: ‘Oh, I don't want to lose my rep. You know, we really like the rep!’ We get it. Business owners develop great relationships with reps, sometimes decades old. But that rep could be charging you upwards of 50% more than you should be paying.
But here’s the thing – if you join a GPO, you'll probably keep the same rep just at a different price point by utilizing the best-in-class contract."
Smaller practices often underestimate the value of aligning with a group purchasing organization (GPO), seeing their own spending as too minimal to matter. What they don’t realize is that by joining a GPO, their modest annual supply spend is aggregated into a much larger collective volume, unlocking significantly better pricing than they could achieve on their own.
Another common concern is that participation will require major changes to how they operate, when in reality their day-to-day processes remain largely the same - they continue to place their own orders as usual, but with access to best-in-class pricing and terms.
Beyond lower costs, GPO alignment can also improve cash flow and predictability through benefits like extended payment terms, elimination of credit card fees, and capped rate increases, allowing practices to keep their money longer and better manage future expenses.
6: The Service Advantage During Supply Shortages
When supplies run low, a GPO can be a lifesaver by providing continuity during a crisis. Jeff recalls:
"The biggest concern for many small business owners is that if you are just buying a small amount and there's a back order, you won’t be prioritized. This happened during the pandemic. There were shortages in IV bags and people couldn't conduct business. Practices weren't getting the product because they didn't have a contract, or if they did, it was based on their levels of usage.”
Aligning with a GPO addresses this risk by elevating practices within large, aggregated contracts, giving them priority access when products are scarce. In addition, GPOs can often source alternatives from multiple suppliers during disruptions, helping ensure continuity of service.
Ultimately, this alignment provides a key advantage: having an advocate that protects access to essential products and looks out for the practice when supply chains are strained.
7: Reducing Worry for a Superior Patient Experience
Ultimately, offloading spend worries onto your GPO will free up your focus for what matters most: your patients.
GPO membership plays a critical role in business continuity by helping practices avoid supply disruptions that can prevent them from delivering needed services. When supplies are readily available and operations run smoothly, practitioners can stay focused on patient care rather than administrative challenges like sourcing products or managing system issues.
This stability improves both provider morale and the patient experience, leading to better care, stronger patient relationships, and increased likelihood of follow-up visits.
Ultimately, by keeping operations aligned and distractions to a minimum, GPOs enable practices to focus on what matters most: their patients.
Stop Leaving Money Behind
Ready to transform your practice's spend management? Contact Una to chat with Jeff or another member of our team who knows the sector inside-out.
Let's discuss how we can help you uncover savings and streamline operations today.
