SOURCE: Novation

June 05, 2007 10:30 ET

Novation Purchase Volume Hits New High in 2006

IRVING, TX--(Marketwire - June 5, 2007) - Novation, the health care contracting services company of VHA Inc., and the University HealthSystem Consortium (UHC), delivered great value to members of VHA, UHC and Healthcare Purchasing Partners International (HPPI) in 2006. Nearly 2,500 VHA Inc. and UHC members along with 9,000 HPPI members used Novation and alliance purchased services contracts to purchase a record $31.6 billion in supplies, devices, drugs and services in 2006.

"VHA, UHC and HPPI members find proven value in Novation's contracting services," said Joellyn Willis, president of Novation. "One of our primary goals is to build on our current momentum and enhance the value we deliver by better aligning our strategies to serve the needs of our alliances and their members."

2006 was a landmark year for Novation -- a new president and an historic international venture. Willis was named president last May bringing more than 25 years of strategic supply chain management, operations and international logistics experience to the post. Willis replaced Mark McKenna who retired after 19 years of service.

Subsequently, Novation made a bold move and ventured into uncharted waters, winning a highly competitive contract to provide procurement services for the National Health Service in England with DHL, a global logistics company. The contract marks the first time another country has tapped into the U.S. health care group purchasing system to generate additional savings for its health care sector. The contract officially began on Oct. 1, 2006.

"We will continue to explore new opportunities to apply our contracting expertise in support of our growth strategy," said Willis. "Novation will continue to match its capabilities to meet members' needs and help improve their bottom lines as they serve patients."

Throughout the year, Novation has taken aggressive steps to expand its market leadership position by investing in new technology and process improvements to strengthen its core business, and by seeking new ways to partner with its alliances to ensure members receive the most value from their contracts.

Additional 2006 highlights include:

Tools & Technology: Novation has made significant enhancements to its contracting tools and technology to help members further streamline the supply chain process. It launched a new electronic sourcing and contracting platform through a new technology partner, Procuri, and adopted new contracting processes designed to enhance contract value and provide alliance members with speedier access to contracts. As a result of the Global Healthcare Exchange (GHX) merger with Neoforma in early 2006, Novation and GHX have also been migrating alliance members from Neoforma's EDI platform to GHX Connect Plus platform for their order management functions. Migrations are expected to be completed by the end of the year. At the same time, Novation is transitioning alliance members from Order Manager to GHX's enhanced Order Center, which incorporates the best features from both platforms for improved discrepancy management functionality. Additionally, Novation made improvements to its innovative automated contracting tool, Form Manager, which allows alliance members to manage letters of commitment and participation online and provides quicker and easier access to Novation contract value. Forms Manager compressed approval times from over two months to less than two weeks.

Pharmacy: Novation launched seven pharmacy distribution agreements representing an estimated $70 billion in drug purchases over the next five years. These agreements provide alliance members with the most competitive pharmacy distribution pricing as well as terms and conditions in the industry.

Standardization Program: Novation's Standardization Program surpassed its rebate payout expectations in 2006. Over $54 million in rebates were paid out to qualified members through Novation's Standardization Programs. In total, the current and previous Standardization Programs have paid out over $600 million in rebates over the last 10 years.

New Technology Program: Novation's new medical technology program ensures that alliance members have access to information about new and potentially innovative health care technology. Novation ensures breakthrough technologies that offer incremental benefits to patient care, patient safety, or healthcare worker safety are available to alliance members through its formal, open competitive bid process. Since the inception of the Novation Technology Forum in November 2002, there have been 185 supplier submissions for contract consideration as new, innovative technology that have resulted in 59 new technology agreement awards. These contracts generated more than $76 million in sales for these suppliers in 2006.

Supplier Diversity Program: Novation is committed to supporting the development of minority, women, and small veteran businesses that meet high quality standards. In May, Novation hired a new leader solely dedicated to leading its supplier diversity program. In 2006, Novation's Supplier Diversity Program generated more than $75 million in alliance member purchases. The program has generated nearly $216 million in purchases for diversity suppliers since its inception in 1999 and continues to grow.

Custom Contracting: Novation offers flexible custom supply cost management options negotiated exclusively to meet the unique needs of individual alliance members or groups of alliance members. In 2006, Novation's custom contracting program delivered its services to six IDN members to achieve more than $12 million in savings.

Group Buy Program: Novation's Group Buy Program had 19 different categories across five periods in 2006 saving alliance members more than $34 million.

Champions for Change Award: For the fourth consecutive year, Novation received the Champions for Change award for its leadership in improving the environmental performance of the health care sector by helping hospitals reduce waste, protect the environment, and eliminate mercury. The award is given by the national health care initiative, Hospitals for a Healthy Environment (H2E).

About Novation

Based in Irving, Texas, Novation is the leading health care contracting services company, delivering unmatched savings and value to nearly 2,500 members of VHA Inc. and the University Health System Consortium (UHC), two national health care alliances and nearly 9,000 members of Healthcare Purchasing Partners International (HPPI). Through its competitive bid process, Novation develops and manages contracts with more than 500 suppliers, both large and small. By combining scale and agility with clinical knowledge and product expertise, Novation offers the most extensive range of innovative contracting services, including: contract development, contract and supplier management, custom contracting, enhanced savings programs, online contract management and analytical tools, order management and online supplier connectivity. VHA, UHC and HPPI members used Novation and alliance purchased services contracts to purchase $31.6 billion in supplies in 2006.

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