Presence Health Becomes Premier Member –”Committed Volume” Program Highlighted

I continue to be impressed by what’s going on with the GPOs. Just ten years ago, they were the butt of jokes and rarely, if ever, did you hear anything complementary, except perhaps by hospital executives whose very compensation depended on their end-of-year, GPO-funded “bonus.”

What a difference a decade, a few senate hearings, the development of SCM as a profession and yes, a genuine desire on the part of GPOs to drive value for their customer-member-providers, has made. How much have things changed? Well, we used to talk about how the supply side dominated the healthcare marketplace. Not only was that fact tossed around to reflect a unique feature of the healthcare supply chain, but it served to level the competence of healthcare supply chain professionals.  We were known as “the laggards.” Today, those battle lines have given way to sophisticated new forms of collaboration –not because the supply-side lost its nerve, but because the balance of power has normalized.

GPOs are building highly sophisticated, optimization-enabled, competitive bid platforms. The scenario planning capabilities of these new systems provide GPOs an unprecedented ability to do things that no one ever thought would be possible, including:

  • Price optimized blends of products and services based on committed demand. Put another way, pricing leverage befitting organizations that manage billions in products and services.

The following press announcement talks about Presence’s participation in Premier’s  “committed purchasing program,” which may not cover all categories in its contract portfolio, but clearly covers those listed.

The point is, it’s not just about “willingness” to commit spend volumes, it’s about a GPOs “ability” to actually do it –and to do it with an integrity that the supply side can trust –and its accountants can book. That’s how better pricing is quickly achieved and upon which a foundation for collaboration and continuous co-value creation can be grounded.

CHARLOTTE, N.C., Apr 19, 2012 (BUSINESS WIRE) — Presence Health has entered into an agreement with the Premier healthcare alliance to create a supply chain infrastructure designed to reduce costs, improve care delivery and prepare for the future.

As a Premier owner, Presence will leverage a national purchasing network with industry-leading contract pricing. Using Premier’s committed purchasing programs, the health system will reduce costs across several critical areas of its supply chain, including med-surg products, pharmacy and food services.

Presence has also joined the Catholic Contracting Group (CCG), a strategic alliance within Premier. CCG’s portfolio of committed contracts with Premier suppliers will drive further value in the above areas, as well as in distribution and purchased services.

With access to the nation’s largest comparative database containing comprehensive data from one in four hospital admissions, Presence will identify opportunities beyond pricing to improve product standardization and utilization. Using this integrated data, Premier’s 2,500 hospital members make data driven, evidence-based decisions on the proper use of supplies, labor and clinical practice patterns. This combination of cost, clinical and outcomes information helps providers drive substantial quality and safety improvements, while saving millions of dollars.

“As part of its evaluation process, the Presence Health group purchasing organization (GPO) selection team established criteria across a broad range of factors, most importantly pricing and other financial considerations. But we also strongly considered availability of support services, technology tools, contracting philosophy, organizational fit, and the degree to which we will have a voice in leadership decisions and product evaluation discussions,” said Rick Salzer, system vice president. “In selecting Premier, one of the largest GPOs in the country, Presence Health has chosen a partner that matches these criteria. Through Premier’s national and CCG portfolios, technology and expertise, we will be able to leverage flexibility and commitment to select the products and services that meet our clinical needs while driving substantial cost reduction across our supply chain.”

According to Premier Chief Operating Officer Mike Alkire, “By collaborating, analyzing and sharing data and best practices across thousands of providers in the alliance, we have evolved purchasing from best price supply contracting to something far more profound. In doing so, our members are able to scale better approaches for their systems to drive out unnecessary expenditures while raising the bar on clinical effectiveness.”

Premier’s CCG members, which now represent more than 223 acute care hospitals and 3,742 alternate sites, include Bon Secours Health System in Marriottsville, Md.; Catholic Health Partners in Cincinnati; Dignity Health in San Francisco, Calif.; PeaceHealth in Bellevue, Wash.; Presence Health; and SSM Health Care in St. Louis.

Presence was formed by the November 1, 2011, merger of Resurrection Health Care and Provena Health. Resurrection has been a Premier owner since 2001 and currently uses Premier’s comparative database to benchmark clinical, financial and operational performance against top alliance hospitals.

About Provena Health — Resurrection Health Care — Now joined as Presence Health

Presence Health is a family of Catholic, not-for profit, healthcare services providing advanced medical care and exceptional service with compassion and hope. With locations in Chicago and its collar counties, as well as in East-Central Illinois, it is the largest Catholic health provider in Illinois, encompassing 12 hospitals, 29 long-term care and senior residential facilities, numerous outpatient services, clinics, home health services, hospice, private duty, and comprehensive Behavioral Health services. The new ministry is sponsored by the Franciscan Sisters of the Sacred Heart, the Servants of the Holy Heart of Mary, the Sisters of the Holy Family of Nazareth, Sisters of Mercy of the Americas and the Sisters of the Resurrection. Visit www.provenaresurrection.org to learn more.

—Tom Finn

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