Dental Group Purchasing 101

The key principle of group purchasing is simple. Combine the purchasing power of many to leverage benefits that an individual alone cannot obtain.

Group purchasing is used in many industries to purchase raw materials and supplies. It is currently a common practice in grocery, health care, electronics and agricultural industries. Group purchasing, or even group selling such as what farmers have done with co-ops for their crops, must provide value to the business participants on both sides.

Group Purchasing Organizations create value by communicating with all parties in the supply chain. Through research of member needs and negotiations with potential business suppliers, a GPO can identify what is important to both groups – and this differs with each product category. The matching and resolution of needs creates a business solution that has value for everyone. Our goal is to establish win-wins. These form long lasting, enduring relationships.

The dentistry profession is one of the few medical fields that has not benefited from the principles of group purchasing. There are several reasons for this. One is that dental practices are highly decentralized. Secondly, the average material spend per practitioner is lower than that of the average medical physician. These two result in a much higher cost of sales than other industries. A third reason is, because dental practices are highly decentralized, sellers have not been able to project, nor expect, high rates of purchase compliance so predictability varies.

The United Dental Alliance was formed with the idea of giving a voice to the many individual dental practitioners. As members accept the concept of the group and support initial business alliances, we can begin to demonstrate to the community of sellers that we are organized and can act as a group. As momentum is built we will attract the involvement of major companies who today are approaching the dental community as individual businesses.

It is the predictability of the actions of the group that have value to the selling community. If the Dental group agrees to support a particular agreement by purchasing under its terms, then the seller receives a benefit that is both demonstrable and measurable – in most cases this is increased sales volume for his/her product. Actual participation for members is completely voluntary but because participation benefits the entire group, members are encouraged to direct their purchases to these companies.

The most effective group purchasing organization is the one that is driven by, and receives direction from, its members. The United Dental Alliance operates under the guidance of three Advisory Groups staffed with operating practitioners.

The Advisory Groups establish areas of contracting focus that they perceive as having the greater value for all members and subsequently approve the agreements that are brought before them on behalf of all members. The United Dental Alliance does not have direct business ties to any manufacturers or suppliers. We represent you and pledge to operate in an open and transparent manner.

Managing material expense for your practice is a moving target. There are many different suppliers each with different business models that make the prediction of a given expenditure difficult. Working collectively can simplify some of this complexity with agreements that are structured to cover the majority of the goods and services you currently buy.

Group purchasing can help a dental practitioner control their expenses and, by having us to negotiate and manage purchasing agreements on your behalf, allows you to concentrate on providing the best possible patient care.