VHA Regional Networks Pursuing New Group Purchasing Model; Four Regional Projects Have Saved a Combined $46 Million

Nov 10, 2004, 00:00 ET from VHA Inc.

    IRVING, Texas, Nov. 10 /PRNewswire/ -- Six hospitals in the Midwest,
 ranging in size from 25 beds to 576 beds, have set aside their competitive
 priorities to participate in a regional program to standardize their supply
 purchases to save more money.  To date, the hospitals have achieved more than
 $14.4 million in supply savings, a 3 to 1 return for their participation in
 this venture.  VHA Inc., the national health care alliance, is helping its
 member hospitals increase efficiency and reduce supply costs by creating these
 regionally-focused purchasing programs.
     VHA serves more than 2,200 health care organizations nationwide, including
 1,400 hospitals.  It has 18 regional offices, and it is using these regional
 offices as hubs to create networks of members that will focus on supply
     "These health care organizations aren't simply asking suppliers for more
 savings, they are committing people and time to examine their clinical
 practices and working with the suppliers to develop business cases for
 standardization.  That's very sophisticated work," said Scott Downing, senior
 vice president of integrated supply chain services for VHA.  "Regional efforts
 like these may lead to shifts in traditional group purchasing practice."
     VHA members that have participated in these regional standardization
 programs have realized a combined savings of more than $46 million to date.
 VHA has offered regional purchasing options to members since 1997, after
 recognizing that member hospitals were demanding more creative avenues to
 attain better pricing with greater flexibility at the local and regional
 levels.  VHA offers regional programs to hospitals in the Midwest, Southeast,
 Southwest and East Coast.  The alliance is currently working with hospitals in
 Illinois, Colorado, and Oklahoma to develop regional programs in those states.
     In Florida and Georgia, VHA offers a program called Supply Cost Management
 Partners (SCMP).  Participation in the program enables member hospitals to
 maximize the benefits of the VHA supply portfolio, as well as join in on new
 opportunities that enhance purchasing options.  These hospitals have realized
 a combined savings of $12 million since beginning the project in 1997.
     VHA member hospitals in Texas and New Mexico began their own regional
 products standardization initiative in the fall of 2003.  The group has
 identified savings of more than $6.5 million.
     VHA members in the East Coast region, encompassing New Jersey and the
 eastern part of Pennsylvania, have the opportunity to participate in more
 targeted regional standardization programs.  Regional efforts began in 1999
 with the creation of a pharmacy distribution initiative that realized almost
 $4 million in savings over three years.  When combined with the projected
 savings for the current agreement, the pharmacy distribution initiative should
 exceed $14 million in savings by 2008.
     Seventeen VHA member hospitals in the East Coast region have also come
 together to leverage their buying power to obtain better prices on cardiology
 products.  The group is currently evaluating pricing structures in their area
 to negotiate better local terms.  In addition, East Coast member hospitals are
 coordinating purchasing efforts for other products with other hospitals to
 achieve the highest discounts available on agreements.
     About VHA
     VHA Inc. is a national cooperative of leading not-for-profit health care
 organizations that work together to improve the health of the communities they
 serve.  Through the cooperative, members benefit from resources to help them
 identify, integrate and implement best practices to improve clinical,
 operational and financial performance.  As a cooperative, VHA distributes
 income annually to members based on their participation.  Based in Irving,
 Texas, with 18 offices across the U.S., VHA was named one of the "100 Best
 Companies to Work For" by Fortune in January 2004, for the fifth year in a
 row.  For more information, go to http://www.vha.com .
      Lynn Gentry           Veronica Hunt
      972/830-0798          310/658-5380
      lgentry@vha.com       vhunt@crtpr.com