SOURCE: Novation

May 16, 2005 08:00 ET

Hospitals Across the Country Dramatically Increase Purchases Through Novation

Novation's Double-Digit Purchasing Growth in 2004 Signals Growing Reliance on Its Supply Services by Hospitals Striving to Control Costs

IRVING, TX -- (MARKET WIRE) -- May 16, 2005 -- Novation, the supply company of VHA Inc. and the University HealthSystem Consortium (UHC), today announced its year-end results for 2004, reporting record purchasing volume, significant growth and satisfied member hospitals.

VHA and UHC members used Novation contracts to purchase $23.7 billion in devices, supplies and drugs, a 10 percent increase over the $20.7 billion purchased in 2003. The double-digit growth is due to members' increasing reliance on Novation for purchases of innovative but expensive devices, members' use of Novation e-commerce tools to buy products on contract and Novation's efforts to contract with large and small manufacturers with which members want to do business. Currently, Novation manages more than 1,000 purchasing agreements with more than 700 suppliers.

"There is a single resounding message from this growth -- hospitals rely on Novation to help them purchase the highest quality and safest drugs, supplies and medical devices at the best prices," said Mark McKenna, president and chief executive officer of Novation. "Novation's core competency is contracting, which frees VHA and UHC members to focus on their core competency -- caring for patients."

More than 2,400 VHA and UHC member health care organizations purchase supplies through the Novation contracts and benefit from Novation's ability to pool the buying power of hospitals across the nation to obtain better prices. In a year-end survey, a growing majority of these members reported high levels of satisfaction with Novation's services. Among UHC members, overall satisfaction rose from a score of 70 in 2003 to 74 in 2004. For VHA members, overall satisfaction stayed steady at 79.

The 2004 survey also showed that 72 percent of the materials managers and directors of pharmacy found Novation's portfolio was more competitive than the overall market.

"Novation offers hospitals a better way to get the most value for our money," said Gary Duncan, CEO, Freeman Health System in Joplin, Missouri. "This efficiency means we have more resources available to provide more people with access to higher quality care."

"Novation listens to what we need and keeps an eye on emerging health care trends and products," said Tony Hinds, vice president, Strategic Sourcing, at Parkland Health & Hospital System in Dallas, Texas. "Novation keeps us current on all new products, technologies and services."

Other Year-End Results:

NOVAPLUS: Novation's private label program, NOVAPLUS, continues to be popular among members who purchased $1.57 billion last year on products such as waste can liners and patient footwear, saving close to 9 percent compared to brand name items.

Marketplace@Novation: VHA and UHC members purchased more than $10 billion through Marketplace@Novation®, the industry's leading online health care exchange -- a 44 percent increase over 2003. Additionally, Novation worked with members that have incorporated Marketplace@Novation into their supply chain management processes and recorded $120.7 million in total documented value.

Supplier Diversity Program: Purchases through Novation's Supplier Diversity Program grew 43 percent over 2003. The Diversity program includes 58 agreements with suppliers and distributors, linking members to a variety of small minority, women and veteran-owned businesses that enable greater supplier choice.

Supply Chain Academy: Introduced in late 2003, Novation's Supply Chain Academy is an online management training program for supply chain executives. The Academy is working with 415 hospitals and has issued nearly 50 Certificates of Achievement to materials management staff members. SCA courses can be used to earn CPE credits towards Certified Materials & Resource Professional re-certification from the Association for Healthcare Resource & Materials Management.

About Novation

Based in Irving, Texas, Novation was established in January 1998 through a combination of the supply programs of VHA and UHC, two national health care alliances. Novation serves the purchasing needs of more than 2,500 members and affiliates of VHA and UHC. These organizations used Novation contracts to purchase more than $23 billion in supplies in 2004. For more information, visit www.novationco.com.

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