New Report Questions Value of Neoforma

Analysis casts doubt on e-commerce company's prospects for growth



Feb 01, 2005, 00:00 ET from Service Employees International Union

    WASHINGTON, Feb. 1 /PRNewswire/ -- A new report released this week,
 Neoforma: A Question of Value, raises concerns about the value of the e-
 commerce company Neoforma, which provides the on-line platform for Novation,
 the largest health care Group Purchasing Organization (GPO) in the United
 States.
     Neoforma: A Question of Value, explores the complex financial
 relationships between Neoforma, Novation and the two hospital associations,
 VHA and University HealthSystem Consortium (UHC), which own GPO Novation.
 Senior Field Researcher Nick Rudikoff said, "We believe these close ties have
 reduced Neoforma's ability to attract business from non-Novation sources,
 which in turn has harmed the company's growth prospects."
     "Neoforma's recent announcement that it is considering a sale or merger of
 the company may reflect acknowledgement of the challenges Neoforma faces in
 this regard."
     The report details the recent scrutiny of GPO's and Novation in
 particular, questioning the long-term sustainability of Neoforma's reliance on
 Novation. Novation is the focus of a federal criminal probe into Medicare
 fraud and GPO business practices have drawn the attention of a Senate
 Committee, two state Attorneys-General, and several federal agencies. These
 investigations are calling into question the fees GPOs charge suppliers for
 marketing products to GPO members. The investigation by the Department of
 Justice is focused on the possibility that GPO members are overcharging
 Medicare for supplies.
     The report was commissioned by the Service Employees International Union
 ("SEIU"). The organization has become increasingly concerned that the absence
 of meaningful competition in the medical supply industry has inflated costs
 for all health care consumers.  SEIU represents 1.6 million healthcare,
 building service, and public sector workers who participate in pension funds
 with over $1 trillion in assets.  SEIU is a longtime advocate of responsible
 corporate governance practices and an active member of the Council of
 Institutional Investors, an organization of over 130 pension funds whose
 assets exceed $3 trillion.
     For more information and to download the report, please visit
 http://www.novationwatch.com.
 
 

SOURCE Service Employees International Union
    WASHINGTON, Feb. 1 /PRNewswire/ -- A new report released this week,
 Neoforma: A Question of Value, raises concerns about the value of the e-
 commerce company Neoforma, which provides the on-line platform for Novation,
 the largest health care Group Purchasing Organization (GPO) in the United
 States.
     Neoforma: A Question of Value, explores the complex financial
 relationships between Neoforma, Novation and the two hospital associations,
 VHA and University HealthSystem Consortium (UHC), which own GPO Novation.
 Senior Field Researcher Nick Rudikoff said, "We believe these close ties have
 reduced Neoforma's ability to attract business from non-Novation sources,
 which in turn has harmed the company's growth prospects."
     "Neoforma's recent announcement that it is considering a sale or merger of
 the company may reflect acknowledgement of the challenges Neoforma faces in
 this regard."
     The report details the recent scrutiny of GPO's and Novation in
 particular, questioning the long-term sustainability of Neoforma's reliance on
 Novation. Novation is the focus of a federal criminal probe into Medicare
 fraud and GPO business practices have drawn the attention of a Senate
 Committee, two state Attorneys-General, and several federal agencies. These
 investigations are calling into question the fees GPOs charge suppliers for
 marketing products to GPO members. The investigation by the Department of
 Justice is focused on the possibility that GPO members are overcharging
 Medicare for supplies.
     The report was commissioned by the Service Employees International Union
 ("SEIU"). The organization has become increasingly concerned that the absence
 of meaningful competition in the medical supply industry has inflated costs
 for all health care consumers.  SEIU represents 1.6 million healthcare,
 building service, and public sector workers who participate in pension funds
 with over $1 trillion in assets.  SEIU is a longtime advocate of responsible
 corporate governance practices and an active member of the Council of
 Institutional Investors, an organization of over 130 pension funds whose
 assets exceed $3 trillion.
     For more information and to download the report, please visit
 http://www.novationwatch.com.
 
 SOURCE  Service Employees International Union