May 19, 2005 14:34 ET

VHA Inc. Delivers $1.3 Billion in Value to Members in 2004

Increase Represents 13 Percent Over Previous Year

IRVING, TX -- (MARKET WIRE) -- May 19, 2005 -- Health care organizations that are members of VHA Inc., the national health care alliance, saved more than $925 million on purchases and received $367 million in total cash value through their participation in the alliance in 2004. This $1.3 billion in total value is a 13 percent increase over total value delivered in 2003 for alliance members.

"VHA delivered a double-digit increase in value for 2004 for two reasons -- more member participation and VHA's success in reducing our operating costs," said Curt Nonomaque, president and chief executive officer of VHA.

VHA's revenue in 2004 was $470.8 million, compared with $451.5 million in 2003. Its operating income in 2004 was $162.3 million, compared with $121.0 million in 2003. As a result, VHA made higher cooperative cash returns to members for 2004.

Overall, VHA members earned total cash value in 2004 of $367.7 million, versus $314.7 million in 2003. Total cash value includes cooperative cash, patrons' equity redemptions and manufacturers' incentive payments. Members earn cooperative cash and equity based on their participation levels in VHA. Members earn manufacturers' incentives throughout the year, and they receive cash redemptions of their patron's equity each year. Checks for the cooperative cash will be distributed to 1,954 patron members within the next few weeks. In addition to the cooperative distribution checks, members will receive a detailed report outlining their specific participation levels and the value they received through VHA during 2004.

Last year VHA members purchased more than $20.1 billion worth of supplies and services through VHA and Novation contracts, a 14 percent increase over 2003 member purchases through the alliance. A more detailed analysis shows that VHA members purchased $1.7 billion in services through VHA agreements and $18.4 billion in supplies through Novation contracts, saving $925.7 million on these purchases. VHA manages approximately 60 vendor contracts for services, and Novation manages more than 600 contracts for medical supplies.

VHA's two core focal points are offering industry-leading supply chain management services and supporting member networks that foster the joint development of solutions for key clinical and operational challenges. "We have a solid track record of helping members improve their economic strength and clinical performance," Nonomaque said. "By working with VHA, members expand their existing resources, extend their abilities and share the power of the alliance with health care organizations across the country."

At the center of VHA's supply chain management offering is Novation, which VHA owns with the University HealthSystem Consortium in Oak Brook, Ill. Based on support from VHA and UHC members, Novation continues to be the leading supply services organization in health care. VHA and UHC organizations used Novation contracts to purchase more than $23.7 billion in supplies in 2004. This includes $18.4 billion in purchases from VHA members, a 14 percent increase over 2003. The Novation figure does not count the $1.7 billion in purchases VHA members made through VHA services contracts.

In 2004 VHA members continued to support Marketplace@Novation, the industry's leading e-commerce solution. Virtually all VHA member hospitals are conducting business now through Marketplace@Novation and/or accessing data to help them reduce their supply costs. Total VHA member purchases through Marketplace@Novation in 2004 exceeded $8.8 billion.

About VHA -- VHA Inc. is a national alliance of leading not-for-profit health care organizations that work together to improve the health of the communities they serve. VHA delivers industry leading supply chain management services and enables regional and national member networks to improve clinical and operational performance and drive sustainable results. Based in Irving, Texas, VHA has 18 local offices serving more than 2,400 health care organizations across the United States.

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