Group Purchasing Organization (GPO) Policy Term Definition

A Group Purchasing Organization is an organization created to leverage the purchasing power of entities to obtain discounts from vendors based on the collective buying power of the GPO members. GPOs are common in the drug industry; the GPO may set mandatory purchasing participation levels from its members or be completely voluntary. Disproportionate share hospitals are prohibited from purchasing covered outpatient drugs from a GPO.  However, drugs used for inpatients may be purchased from a GPO.