June 21, 2010 08:01 ET

Seventeen Hospitals in Pennsylvania Form New Supply Network: Purchasing Coalition of Pennsylvania

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

IRVING, TX--(Marketwire - June 21, 2010) - Seventeen hospitals in 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 will help the new purchasing coalition organize and focus its supply chain improvement activities. The Purchasing Coalition of Pennsylvania, as it is known, represents more than $1 billion in combined annual supply purchases. The network will work with VHA and act as a single entity in order to drive savings and supply chain efficiency. 

The coalition will leverage VHA's contracting support and supply chain management expertise to obtain better pricing on aggregated purchases. The network will be governed by a committee of supply executives recruited from the participating members. This committee will develop the strategies, guidelines and processes that will ensure the group can reach their savings objectives. The network members have agreed to abide by the following guiding principles:

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

Members will 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."

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™. Through these networks, VHA members join together to reduce supply chain costs and increase operational efficiencies beyond what they could achieve individually -- on average, members save 7% to 10% annually through network contracts.

"While we will benefit from the economies of scale the group will create, we will also retain the ability to make independent decisions about product purchases, based on our organizational clinical priorities," said Daniel F. Simmons, Senior Vice President/Treasurer, Monongahela Valley Hospital, Inc. "But we have all agreed to aggressively pursue product standardization whenever possible, since that will drive value for all the organizations."

Through VHA SupplyNetworks members can:

  • Lower prices, improve inventory management and reduce transportation costs over 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 brainpower enables the hospitals to reach a clinically-supportable consensus about which medical products to buy in order to provide better clinical care.

VHA currently supports more than 25 supply networks across the nation. Cumulatively, supply network members saved an additional $100 million in 2009, on top of the purchasing discounts members already receive as members of VHA.

The following VHA member hospitals in Pennsylvania are participating in the new Purchasing Coalition of Pennsylvania, which will work with VHA and act as a single entity in order to drive savings and supply chain efficiency:

Butler Health System Butler
Conemaugh Health System Johnstown
DuBois Regional Medical Center DuBois
Ephrata Community Hospital Ephrata
Fayette Regional Health System Uniontown
Hamot Health Foundation Erie
Jameson Health System New Castle
Jefferson Regional Medical Center Pittsburgh
Lancaster General Lancaster
Monongahela Valley Hospital Monongahela
PinnacleHealth System Harrisburg
Sharon Regional Health System Sharon
St. Clair Hospital Pittsburgh
Summit Health Chambersburg
Susquehanna Health Williamsport
The Reading Hospital and Medical Center Reading
WellSpan Health York

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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