SOURCE: VHA

January 07, 2008 11:14 ET

VHA Inc. Study Reveals Hospital Spending for Contracted Services Is Expected to Grow in 2008 and 2009

IRVING, TX--(Marketwire - January 7, 2008) - A new study released by VHA Inc., a national health care alliance, reports that 70 percent of hospitals expect their volume of contracted services to grow or remain unchanged over the next two years. The survey that garnered responses from 161 hospital administrators, materials managers and support service executives indicates that hospitals outsource and purchase services as a way to address shortage issues and reduce operating costs.

Nearly three-quarters (74 percent) of respondents reported that their hospitals use contract services because they lack internal resources. "Hospitals are increasingly outsourcing to help achieve their business and financial goals, which is critical in today's fiscal climate," said Amy Anthony, vice president of supply chain services at VHA. "Strategic use of purchased services means that hospitals can focus on their number one goal -- providing quality care to patients."

The study also reports that 29 percent of respondents use supplier diversity as criteria when evaluating suppliers.

One area where hospitals are planning to focus their outsourcing efforts is Information Technology. According to the study, nearly two-thirds (63 percent) are planning to invest in Electronic Medical Records (EMR) systems. One third (34 percent) of respondents already look to outside suppliers for assistance with their Information Technology needs.

The study revealed that the top services hospitals currently outsource include:

--  Support services: Document management / shredding services and laundry
    services (74 percent)
--  Capital asset: Facility and equipment planning (58 percent)
--  Clinical operations: On-call radiologists / nighthawk services (56
    percent)
--  Revenue management: Billing / collections (55 percent)
--  Human resources: Computer-based learning systems and employee benefit
    plans (52 percent)
    

The study is the seventh in a series of research studies that VHA has conducted on services contracting. VHA looks at member reasoning and attitudes for outsourcing (which are services contracted externally to a third party, such as housekeeping services) and for purchased services (which are services purchased from third parties but the function is completely internal, such as audio conferencing).

VHA offers members purchased services and outsourcing contracts with more than 70 third-party suppliers enabling preferred pricing, due diligence, assured performance and service recovery support. In 2006, VHA members purchased more than $2 billion in services through these agreements.

About VHA -- VHA Inc., based in Irving, Texas, is a national health care alliance that provides industry-leading supply chain management services and supports the formation of regional and national networks to help members improve their clinical and economic performance. With 16 offices across the U.S., VHA has a track record of proven results in serving more than 1,400 not-for-profit hospitals and more than 21,000 non-acute care organizations nationwide.

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