Case Study: Practice Owner Saves on High-Volume Orders

Dr. Bill Swartz, owner of Clocktower Animal Hospital in Herndon, Va., says his six-doctor practice saves nearly $36,000 a year through a buying group.

Dr. Swartz bought into a large distributor of animal health products eight years ago for $3,000. (He's been a board member of the buying group for two years.) Although the group charges a small markup on products to generate operating expenses, Dr. Swartz says he saves an average of 10 percent on every order.

Spending close to $30,000 on products and supplies each month, the practice saves $3,000 per month. So Dr. Swartz made back his investment in only one month. Plus he receives a year-end return--$5,000 in 2003--based on his total order volume.

In terms of selection, Dr. Swartz says the buying group carries his regularly used products, making inventory management more efficient. For the hospital administrator, ordering from one source frees up six hours per week--time that can be devoted to other tasks. The treasurer and bookkeeper also save time because they're only tracking one check for health products, he says.

The practice usually places orders weekly. If the order exceeds $100, it'll ship for free, but last-minute or low-quantity requests require a small fee. The buying group ships and bills most of the products from their two distribution centers on the same day. So Dr. Swartz receives his order in one to two days, which he says is an overwhelming benefit. "Plus, by ordering weekly, we can operate more efficiently," he says. "We have less dead money on the shelves, and our markup can be less for our customers."

Although Dr. Swartz is pleased with his choice to join the 3,000-member buying group, if he chooses to exit, he can resell his share for full reimbursement. But with his level of satisfaction, he's not likely to leave. "I know that I?m getting the best price without having to make multiple phone calls," he says.