SOURCE: Novation

May 05, 2008 11:32 ET

Novation Reports Record Year

Members Saved $518.1 Million Through Their Participation in Novation Contracts

IRVING, TX--(Marketwire - May 5, 2008) - Novation, the leading health care contracting services company of VHA Inc., University HealthSystem Consortium (UHC) and Provista, LLC, today announced its 2007 year-end results. Novation and its alliances posted a purchasing record of $33.1 billion in supplies, devices, drugs and purchased services, a nearly 5 percent increase over 2006. In addition, Novation continued to accomplish aggressive goals and objectives with the National Health Service in the United Kingdom. VHA, UHC and Provista members saved $518.1 million through their participation in Novation contracts. Novation continues to provide the industry's leading contract portfolio with pricing that is documented to be 3 to 5 percent better than other GPOs.

"We're thrilled to report our best year ever, with the highest member savings and satisfaction results in Novation's history," said Joellyn Willis, Novation's president. "Looking ahead, we have an incredibly strong trajectory for 2008, and we remain focused on delivering the highest quality contracts and services, to the members we serve."

2007 Business Successes

Physician Preference Contracting -

Novation enhanced its orthopedic contract offerings in 2007 by signing 20 new multi-source agreements, making it the industry's largest hip and knee portfolio. The savings for members is estimated to be nearly $188 million over the next three years.

In 2007, Novation worked with VHA and UHC to analyze the spend data of more than 200 members in cardiology. Since 2003, Novation has analyzed more than $8.2 billion in spend and has identified more than $840 million in savings for 480 hospitals. To date, the overall member savings has been on average 11 percent.

Signature Supplier -

Also this year, Novation launched its latest innovative contracting strategy, Signature Supplier, developed to enhance the high-performance contract portfolio for participating VHA, UHC and Provista members and suppliers. Signature Suppliers commit, during the competitive contracting process, to work strategically with Novation to provide unequalled value to VHA, UHC and Provista members in the form of market best price and unique value beyond price. ev3 is Novation's first Signature Supplier.

Pharmacy Failure-to-Supply Program -

Taking advantage of Failure to Supply terms in our contracts, Novation is the only group purchasing organization (GPO) to offer a service designed to simplify the collection of lost dollars by removing the administrative burden from members. Since its launch in December 2007, more than 1,100 members have taken advantage of this program. The centralized Failure-to-Supply Recovery Service team is dedicated to the retrieval of failure-to-supply funds. Recovered dollars are returned to members in the form of a wholesaler credit-on-account or check. VHA, UHC and Provista members join by submitting an enrollment agreement located on the Marketplace or Provista Web sites.

Supply Chain Data Management -

The Novation product master is now the industry's largest centralized repository of comprehensive, high-quality product data. It contains information on more than 3.6 million medical products and is the backbone for the spend analytics tools offered by VHA and UHC. By cross-referencing information from the product master with members' spend data, members can realize optimal value from their purchasing decisions. This cross-referencing capability also gives Novation a more complete picture of members' collective spend, which allows Novation to structure its sourcing and contracting activities to better support how members use health care products.

Standardization -

In 2007, Novation launched six standardization portfolios and paid an estimated $60 million in rebates to members. The six portfolios include: Anesthesia, Surgical III (3), Respiratory, Food, NOVAPLUS Pharmacy and Medical IV (4).

Custom Contracting Services -

In 2007, Novation launched new custom engagements with 37 members. Members taking advantage of this program include VHA East Coast, the Texas Purchasing Coalition and the partnership of Univ. of Virginia and Virginia Commonwealth University. Custom contracting services aid dedicated members in prioritizing savings opportunities available through contract compliance and working with suppliers to maximize sales activities.

Fifty-two alliance members took advantage of Novation's comprehensive enhanced contracting services and saved more than $13.9 million dollars.

Supplier Diversity -

Novation is committed to economic development and wants to do business with minority-, women- and veteran-owned businesses (MWVBE). In 2007, the Supplier Diversity program increased the contract portfolio by 27 percent over 2006. The Supplier Diversity program generated $83 million in member purchases, a 10 percent increase over 2006. Since its inception in 1999, the Supplier Diversity Program has grown to include 63 supplier and distribution agreements and member spend is nearly $300 million.

National Group Buy Program -

This year the national group buy program had 30 buys and is expected to generate nearly $390 million in sales, generating more than $12.5 million in revenue, and $49 million in savings with a customer satisfaction rate of 4.85 out of 5.

Bob Majors' Scholarship -

Novation launched a memorial scholarship named in honor of Robert "Bob" Majors who passed away in January 2007. In December 2007, scholarships were awarded to Dale Montgomery, vice president of support services at VHA-member Hays Medical Center in Hays, Kan., and James Shepherd, director of materials at UHC-member University of New Mexico Health Sciences Center and Hospitals in Albuquerque, N.M. Each received a $2,500 scholarship to attend a 2008 materials management-related conference or leadership education opportunity.

About Novation

Founded in 1998, Irving, Texas-based, 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 HealthSystem Consortium (UHC), two national health care alliances and nearly 12,000 members of Provista, LLC. Through its competitive contracting process, Novation develops and manages contracts with more than 500 suppliers. Novation offers the most extensive range of advanced 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 Provista members used Novation contracts to purchase more than $33.1 billion in 2007. For more information, please visit,

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