SOURCE: VHA

June 15, 2010 13:00 ET

Seventeen Hospitals in New Jersey and Pennsylvania Form East Coast Purchasing Coalition

New Supply Network Expected to Reduce Supply Costs, Pave the Way for Improved Supply Utilization

IRVING, TX--(Marketwire - June 15, 2010) -  Seventeen hospitals in New Jersey and Pennsylvania have agreed to work together to reduce their supply expenses and improve their operational performance. The hospitals are all members of VHA Inc., the national health care network. VHA is helping the new purchasing coalition organize and focus its supply chain improvement activities. 

The East Coast Purchasing Coalition, legally formed in October 2009, represents more than $1.3 billion in combined annual supply purchases. Now fully operational, the network acts as a single entity to leverage VHA's contracting support and supply chain management expertise in order to drive savings, improve supply chain efficiency and obtain better prices on aggregated purchases. 

Hospitals are under heightened pressure to deliver quality care in the midst of rising costs, decreasing reimbursement and increasing competition. To manage these challenges, many health care organizations are turning to VHA SupplyNetworks™ to reduce supply chain costs and increase operational efficiencies beyond what they could achieve individually. On average, members annually save between 7% and 10% through network contracts.

A governance committee of supply executives recruited from the participating members develops the strategies, guidelines and processes that ensure the group can reach their savings objectives. The network's members have agreed to abide by the following principles:

  • A defined decision making process
  • Volume aggregated contracting strategies
  • Member commitment
  • Sustained contract compliance

Members retain the ability to make independent decisions about product purchases and have agreed to aggressively pursue product standardization whenever possible.

"Hospitals are experiencing tighter credit availability, declining reimbursements and receivables, and decreased operating income. As a result, they are looking for innovative ways to further reduce costs without cutting staff, limiting services or sacrificing clinical quality," said Scott Downing, executive vice president of Supply Chain Management at VHA. "By aggregating volume in supply networks, our members can zero in on standardization opportunities and establish a platform to discuss clinical utilization which holds significant potential for savings and higher quality of care. Supply networks also create opportunities for operational efficiencies that aren't available through any other means in the health care industry today."

"Being part of a supply network not only provides us with the opportunity for higher product standardization, but allows us to work together on high cost areas such as physician preference items," said Michael Barber, president and chief operating officer at The Chester County Hospital and executive oversight committee chair for the East Coast Purchasing Coalition.

Through VHA SupplyNetworks members can:

  • Lower prices, improve inventory management and reduce transportation costs throughout the entire supply chain process
  • Improve product standardization and optimize product utilization through unique contract strategies
  • Facilitate peer-to-peer connections to transfer and rapidly apply best practices
  • Enhance relationships with key suppliers and distributors

In their most mature form, VHA supply networks enable members to pursue higher value activities, such as centralized ordering and centralized logistics. VHA also believes supply networks provide innovative platforms for utilization discussions because the collective expertise enables the hospitals to reach a clinically-supportable consensus about which medical products to buy to provide better clinical care.

VHA currently supports 23 supply networks nationwide that saved members an additional $100 million in 2009, on top of the purchasing discounts members already receive as members of VHA.

BACKGROUND
The following VHA member hospitals are participating in the new East Coast Purchasing Coalition. Acting as a single entity, it will work with VHA to drive savings and supply chain efficiency:

    Abington Health     Abington, PA
    Capital Health System     Trenton, NJ
    Chilton Memorial Hospital     Pompton Plains, NJ
    Crozer-Keystone Health System     Springfield, PA
    Grand View Hospital     Sellersville, PA
    Holy Redeemer Health System     Huntingdon Valley, PA
    Hunterdon Healthcare System     Flemington, NJ
    Lehigh Valley Health Network     Allentown, PA
    Newton Memorial Hospital     Newton, NJ
    Penn Medicine     Philadelphia, PA
    Pocono Health System     East Stroudsburg, PA
    Shore Memorial Health System     Somers Point, NJ
    Solaris Health System     Edison, NJ
    South Jersey Healthcare     Vineland, NJ
    The Chester County Health System     West Chester, PA
    Underwood-Memorial Hospital     Woodbury, NJ
    Warren Hospital     Phillipsburg, NJ

About VHA
VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. Formed in 1977, through its 16 regional offices, VHA serves more than 1,400 hospitals and more than 28,000+ non-acute care providers nationwide. VHA was ranked by Modern Healthcare as the 7th best place to work in health care in 2009.

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