VHA SupplyNetworks® Leverage Scale to Generate Greater Cost Savings for Hospitals from West Virginia to New York

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Hospitals consolidate their purchases of medical supplies and services to drive savings and supply chain efficiency.

Two VHA SupplyNetworks affiliated with VHA Inc., the national health care network, recently consolidated to form the Mid-Atlantic Purchasing Coalition (MAPC), which represents 26 health care organizations in New Jersey, Pennsylvania and West Virginia. Through this merger, participating hospitals can aggregate purchasing volumes and achieve greater cost savings. On the heels of this successful merger, nine New York hospitals participating in the Empire-Metro Sourcing Collaborative and two regional members also joined MAPC.

The hospitals will consolidate their purchases of medical supplies and services in order to drive savings and supply chain efficiency. The growth and partnership of these two supply networks builds upon existing collaborations between member hospitals ranging in size from small community hospitals to academic medical institutions, formalizing their commitment to leverage the network’s size and scale for contracting working together to identify new areas of cost savings.

“With the continued financial pressure not-for-profit hospitals face, the value we’re able to provide in savings and collaboration benefits not only to the health care organizations participating but also their patients and communities,” said Taylor White, VHA’s senior vice president of supply networks. “It’s exciting to see hospitals in these two regions that span as far north as the border of Canada to West Virginia work together to problem-solve and echoes what we see across the industry.”

The combined spend of the consolidated supply network is approximately $3.2 billion annually which offers significant volume and flexibility in contracting. In addition, the clinical specialization of some of the participating organizations will further shape improvements in physician preference initiatives particularly in pharmacy and oncology. In the future, new areas of focus and opportunity for the group will include services, physician preference, pharmacy and laboratory.

“Through participation in MAPC and now with the addition of hospitals from the Empire-Metro Region, we can aggregate our volume and act as a single contracting organization to save on supplies, pharmaceuticals and services and apply these resources towards patient care,” said MAPC executive committee co-chair, Michael Barber, president, The Chester County Hospital and Health System, West Chester, Penn.

Dan Simmons, chief financial officer and treasurer, Monongahela Valley Hospital, Monongahela, Penn., shared a similar view: “Working with the other MAPC hospitals we’ve been able to discover best practices from our colleagues and work together to improve our organization. It’s a great environment where we can all gain insight from each other’s experience.”

As network members come together to form larger organizations in terms of size, scope and total supply spend, participation in networks across VHA organizations increased from 50% to 73% between 2009 and 2012. In addition, network savings in that same period almost tripled, from $67 million to greater than $200 million annually. The organization uses Novation’s contract portfolio to obtain better pricing on clinical commodities and clinical preference items that hospitals rely on to provide care.

About VHA:
VHA Inc., based in Irving, Texas, 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. Since 1977, VHA has leveraged its expertise in analytics, contracting, consulting and networks to help members achieve their operational, clinical and financial objectives. In 2012, VHA delivered record savings and value of $1.9 billion to members. VHA serves more than 1,350 hospitals and more than 72,000 non-acute care providers nationwide, coordinating delivery of its programs and services through its 13 regional offices. VHA has been ranked as one of the best places to work in health care by Modern Healthcare since the publication introduced this list in 2008.

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Anne Rener
VHA Inc.
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