May 22, 2007 16:40 ET

VHA Inc. Delivers $1.4 Billion in Savings and Value to Members in 2006

IRVING, TX -- (MARKET WIRE) -- May 22, 2007 -- VHA Inc., the national health care alliance, reported today that in 2006, it delivered more than $1.4 billion in savings and value to its member health care organizations through its supply chain management programs. In addition, VHA's clinical programs helped members improve care for the 10 million patients who are treated at VHA hospitals every year.

VHA serves more than 2,400 health care organizations nationwide, including 1,400 not-for-profit hospitals. These organizations touch thousands of other health care facilities: doctors' offices, nursing homes, surgery centers, and more, expanding the value VHA provides across its membership.

In 2006, VHA saw increases in all of its key financial statistics, including:

--  Revenue jumped 10 percent, from $502.6 million to $555.0 million
--  Operating income increased 28 percent, from $220.1 million to $280.9
--  Cash distributions to members increased 7 percent, from $388.6 million
    to $416.3 million
"We continue to see increasing member participation, which says we're providing services that are making a difference for our member organizations, both clinically and operationally," said Curt Nonomaque, president and chief executive officer of VHA. "Member satisfaction scores reached new heights last year, especially with our supply chain initiatives, and we're expanding our clinical agenda to help members accelerate performance improvement efforts."

One of VHA's core strengths is supply chain management and contracting. VHA's contracting services company, Novation, helps members save money on supplies, drugs, devices and equipment. Last year, members purchased $22.9 billion in supplies and services through VHA and Novation contracts, a 6 percent increase over 2005.***** VHA members purchased $20.8 billion in supplies through Novation and $2.1 billion in services through VHA. Alliance members saved $994.3 million through their participation in VHA's network and supply chain services in 2006.

Member health care organizations across the country saw major cost savings by working with VHA. For example, St. Luke's Hospital in Duluth, Minn. identified more than $3.8 million in cost-saving opportunities by working with VHA to analyze its purchases in key clinical departments, including pharmacy, surgery, imaging, cardiac catheterization lab, endoscopy, respiratory therapy and lab. Together, they implemented product standardization initiatives, changed suppliers, renegotiated contracts and strengthened the hospital's value analysis team.

In addition to supply chain management services, members also count on VHA for help with clinical improvement activities, so VHA supports and promotes the formation of member networks that allow hospitals to work together to develop solutions to key clinical challenges. The clinical networks assist members to improve in several areas, such as heart care, operating room efficiency and medication safety. For example, VHA launched a national effort to help its members implement Rapid Response Teams, which are hospital teams that can provide immediate assistance that prevents patients in medical-surgical units from spiraling toward a crisis, such as cardiac arrest or shock. Thirty-one hospitals from Maryland, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Washington, D.C. joined the VHA initiative through its Central Atlantic office. By learning as a network and participating in VHA-sponsored educational meetings, using standard data collection tools and sharing their results, these hospitals successfully addressed critical patient care issues. At least 68 percent of the hospitals decreased their mortality rates and experienced 256 fewer code blue episodes (incidents when the patient stops breathing) outside of the intensive care unit (ICU).

Palomar Pomerado Health, San Diego, joined VHA in 2006, and has realized significant benefits already. For medical-surgical supplies alone, the health system saved $500,000 in 2006. "Our relationship with VHA is still very new, and we expect to get a lot more benefits from it going forward," said Michael H. Covert, president and chief executive officer. He points out that saving money on supplies wasn't the only reason for joining VHA. "We also wanted to be part of a group that included other institutions of our size and complexity. We wanted to share ideas with peers who faced the same challenges we did, from physician issues to value analysis."

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 17 offices across the U.S., VHA has a track record of proven results in serving more than 2,400 health care organizations nationwide.

***** Novation and alliance contract purchasing volume for 2006 was $31.6 billion: $22.9 billion from VHA members, $5.6 billion from members of the University HealthSystem Consortium, and $3.1 billion from health care organizations that purchase through HealthCare Purchasing Partners International.

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