Novation Releases Its 2012 Economic Trending Reports to Help Hospitals Forecast Supply Budgets and Effectively Manage Supply Costs Novation's Summer-Fall 2012 Budget Impact Projections Report and 2012 National Economic Impact Survey highlight key economic trends

IRVING, Texas, Sept. 11, 2012 /PRNewswire/ -- Novation, the leading health care supply chain expertise and contracting company for the members of VHA Inc., UHC, Children's Hospital Association, and Provista LLC, is pleased to announce the release of its 2012 economic trends reports – the Budget Impact Projections report and the National Economic Impact Survey. 

"Economic information and effective cost management are more important than ever to the health care organizations we serve," said Pete Allen, Senior Vice President, Sourcing Operations, Novation.  "Financial pressures continue to squeeze hospital budgets, and our survey indicates that the top concerns facing today's health care facilities continue to be (1) reimbursement cuts, (2) impact of health care reform, and (3) reduced operating margins."

Budget Impact Projections Report
The Summer-Fall 2012 Budget Impact Projections report provides health care organizations with information to assist in the supply-related budgeting process and more effectively managing supply costs. The report uses a number of resources, including Novation contract information and category experts, suppliers, raw material resources, the U.S. Producer Price Index (PPI) and the U.S. Consumer Price Index (CPI).

The report examines economic indicators such as the CPI and PPI, commodities, global exchange rates, labor costs, and the state of the global economy. It also explores the raw materials market in depth and its forecasted performance in such categories as energy, metals, resins, latex, paper and cotton. Finally, the report highlights trends on the overall food market and detailed information on categories such as wheat, corn and dairy products.

Based on the information examined in the report, Novation anticipates the overall national market prices for health care supplies to increase 2.9 percent in 2013.

National Economic Impact Survey
The National Economic Impact Survey is an annual survey of materials management executives and chief financial officers from VHA Inc. and UHC member hospitals across the country. The survey unearthed the following key findings:

  • When asked about their level of financial recovery following the economic downturn, the results were a slight improvement over last year's results. This year, 37 percent of respondents indicate that they have experienced significant financial improvement. The highest percentage of respondents, at 42 percent, indicates their financial situation has worsened, while the rest indicate they have seen no change.   
  • Because of the challenging economic environment, 88 percent of respondents foresee either a decrease in staffing or no change at all. Only 12 percent predict an increase in staffing. But of that 12 percent, the majority expects to see a staff increase in nursing.
  • All of the respondents indicate that they foresee increases in all specialties of physician employment with family practice as the highest increase according to 95 percent of respondents.
  • 58 percent of the respondents foresee an increase in IT infrastructure purchases over the next year at their facilities, while only 10 percent foresee a decrease.
  • The opinions regarding facilities improvement and capital projects spending are relatively evenly split. 32 percent of the respondents foresee an increase in facilities improvement and capital projects over the next year, while 29 percent expect a decrease and 39 percent do not anticipate any change.
  • In light of financial demands, respondents are focusing their efforts to reduce costs in specific areas: 80 percent of respondents are focusing on standardization, 77 percent on process improvement, and 69 percent indicate they are reducing costs through their commitment to their GPO.

"Not-for-profit community hospitals, academic medical centers and our nation's pediatric facilities – the very organizations Novation serves – are at the center of this economic storm," said Allen. "They are the ones providing sorely needed health services to the most vulnerable in our society and training the next generation of care givers. These health care organizations are fighting to keep their costs low and health care affordable, and we have a responsibility to help them achieve this goal.  We all have a stake in this." 

To view the full National Economic Impact Survey, please visit and to view the full Budget Impact Projections report, please visit

About Novation, Winner of the Ethics Inside® Certification
Founded in 1998, Novation is the leading health care supply chain expertise and contracting company for the more than 65,000 members of VHA Inc. and UHC, two national health care alliances, Children's Hospital Association, an alliance of the nation's leading pediatric facilities, and Provista, LLC. Novation provides alliance members with sourcing services, as well as information and data services. Based in Irving, Texas, Novation develops and manages competitive contracts with more than 600 suppliers. VHA, UHC, and Provista members used Novation contracts to purchase more than $40 billion in 2011. Novation recently earned the coveted Ethics Inside® Certification from Ethisphere Institute, a leading international think tank dedicated to the research and promotion of best practices in corporate ethics and compliance. Novation was also named on Ethisphere's World's Most Ethical Companies list, and is the only company in the health care industry to earn both distinctions.  To learn more about Novation, please visit and follow @NovationNews.

SOURCE Novation


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