March 14, 2011 11:42 ET

VHA Inc. Leverages Strength of Member Networks to Help Hospitals Save Money and Operate More Efficiently

IRVING, TX--(Marketwire - March 14, 2011) - As hospitals continue to look for ways to improve their performance in light of increasing demands coupled with lower reimbursements, VHA Inc., the national health care network, is helping its members meet these challenges through regional supply networks. The VHA SupplyNetworks™ create channels for member hospitals to collaborate and create avenues for the hospitals to save money and increase efficiencies beyond what they can achieve on their own. 

VHA currently supports 23 regional supply networks through which members save, on average, 8% to 12% annually via network contracts. In 2010 alone, members participating in VHA SupplyNetworks saved $100 million.

"From its inception in 1977, VHA has focused on helping its members leverage the power of our network, tapping into the knowledge and resources that VHA offers both nationally and regionally," said Taylor White, senior vice president, supply networks at VHA. "No matter how large, hospitals today can no longer operate as islands. The new health care environment is forcing hospitals to find ways to collaborate. We have demonstrated the numerous advantages of collaborating through VHA to achieve better results and overall savings."

To further support member collaboration, VHA hosted supply chain executives from all of the VHA SupplyNetworks at its first Executive Summit this past October in Dallas. The summit promoted peer-to-peer sharing and enabled the leaders of the individual supply networks to examine the latest innovative strategies and best practices to accelerate network savings. 

"We find that both the savings and operational efficiencies we have realized from belonging to the Upper Midwest Consolidated Service Center have made an enormous difference in helping us maintain a healthier bottom line, despite today's difficult environment," said Kris Peterson, director, Supply Chain and Support Service, CentraCare Health System, St. Cloud, Minn. 

Through VHA SupplyNetworks, groups of members can:

  • Accelerate supply savings through commitment and aggregation
  • Reduce costs through network participation, operational consolidation and shared resources
  • Drive decisions on which supply categories to focus on and which supplier to select
  • Establish peer-to-peer connections to rapidly apply best practices and drive innovation

Some highlights of recent VHA SupplyNetworks results include:

  • Upper Midwest Consolidated Services Center, LLC -- This network was formed in 2008 with 35 VHA members in Illinois, Minnesota, North Dakota, South Dakota and Wisconsin. Its annual supply spend is $3.5 billion and the members of this network exam opportunities to reduce supply costs by focusing on standardization across suppliers and distribution partners. Since its inception, the UMCSC has saved its members $46 million, on top of the discounts each member already receives through VHA. 
  • AROK Purchasing Coalition, LLC -- Encompassing 17 hospitals in Arkansas and Oklahoma, this VHA supply network has generated nearly $11 million in annualized savings for its members since its inception in 2008. They have focused mostly on commodity products and savings on medical distribution services, and are now launching efforts to collaborate with clinicians to drive deeper savings on more sophisticated medical devices. Together, the members of the network purchase $650 million in supplies annually. 
  • Mid-America Service Solutions, LLC -- Formed in 2009, this supply network includes more than 35 hospitals in Kansas and Missouri. In its brief history, MSS has grown to encompass a full range of opportunities afforded to members of a consolidated service center, as well as added benefits: reduced supply costs, shared back office functions, increased supply chain control, reduced inventory, standardized delivery model, improved contract compliance and a forum for collective innovation. Since inception, 145 initiatives have been completed, with MSS saving $13 million and putting $169 million in member spend under contract.

"Hospitals are being squeezed from every direction and at the same time they are being held accountable to do more than ever before for their patients, so they have to look at ways to reduce costs without reducing staff," said VHA's White. "Not only do VHA SupplyNetworks offer members the opportunity to reduce costs through aggregated volume and identify and promote opportunities for standardization, the networks also promote operational efficiencies that are unique to the health care industry."

In their most mature form, VHA SupplyNetworks enable members to pursue higher value activities, such as centralized ordering and logistics. VHA SupplyNetworks also provide innovative platforms for product utilization discussions because the collective expertise of the network members enables the hospitals to reach a clinically supportable consensus on which medical products to buy.

About VHA
VHA Inc., based in Irving, TX, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. In 2009, VHA delivered record savings and value of $1.47 billion to members. Formed in 1977, VHA serves 1,400 hospitals and more than 30,000 non-acute care providers nationwide, coordinating delivery of its programs and services through its 16 regional offices. VHA has been listed as one of the best places to work in health care by Modern Healthcare since 2008 and one of the best places to work in IT by Computer World since 2007.

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