Voluntary Hospitals of America came out the victor in a tug-of-war among three alliances for the right to claim Barnes-Jewish/Christian Health Services as a member.
In a brief written statement to MODERN HEALTHCARE, the St. Louis-based system said it will end business with San Diego-based American Healthcare Systems and Westchester, Ill.-based Premier Health Alliance when current contractual obligations are met.
Christian was a member of AmHS when it merged last year with Barnes-Jewish, the product of a 1992 merger of Barnes Hospital and Jewish Hospital. The deal between Christian and Barnes-Jewish created Missouri's largest healthcare system, having 3,113 staffed beds and more than $1 billion in operating revenues. Jewish belonged to Premier, and Barnes contracted with VHA.
The system's position as a member of three competing alliances has been watched closely by the healthcare community. Many other merged organizations are expected to face similar decisions, and their choices could realign power among hospital groups. Such actions also bear on the financial health of vendors, which must change revenue estimates from contracts when hospitals switch purchasing programs.
"The first decisions are always interesting because they set the stage for how later analyses will be done," said Teri Louden, a partner in Louden & Co., a Nashville, Tenn.-based healthcare consulting firm. "In the next merger where this happens, my guess is someone is going to call Barnes-Christian."
A spokesman for the hospital system declined to give a date for the transition or elaborate beyond the statement.
"In the final analysis, a creative VHA proposal was the critical success factor," the statement said. "That proposal combined an innovative approach to traditional programs like group purchasing with a unique opportunity to advance our position as a regional provider of care through the VHA Great Rivers Network."
The Great Rivers Network is one of VHA's 29 regional organizations. Purchasing executives have said the growth of regional provider networks demands stronger regional programs from purchasing groups and alliances (Sept. 27, 1993, p. 49).
"What's likely to be happening is that hospitals are making these de cisions not on which buying group is getting the best price on sutures but on which group is likely to give them more punch in the region," said Gary Appel, a vice president at Chicago-based SMG Marketing Group, which tracks purchasing group membership.
In a December memo to shareholders, C. Thomas Smith, VHA's president and chief executive officer, said the decision by Barnes-Jewish/Christian confirmed VHA's strength.
A Premier spokeswoman said the group was disappointed but had been in close competition with VHA. Executives at AmHS weren't available for comment on the decision.-Lisa Scott