Voluntary Hospitals of America members no longer will pay a standard 7% fee for distributed medical-surgical products but will pay a fee based in part on their utilization of the VHA distribution program.
That change to VHA's medical-surgical distribution program is one of several born from members' recommendations last year. Materials management professionals said the actions of the giant alliance indicate a shift in hospitals' distribution needs.
The new fee matrix and other changes should lead more of VHA's 930 hospitals to standardize products and use fewer distributors, said Mark Mc-Kenna, vice president and general manager of the medical-surgical business at the Irving, Texas-based alliance. Such steps can cut supply costs, he said.
Since 1985, VHA hospitals have paid the cost of products plus a standard 7% distributor fee. The program originally was thought highly innovative because it separated distribution cost and treated hospitals of different sizes equally.
Effective in April, fees will stem from several measures, including hospitals' monthly purchase volume, their payment terms and how much they purchase from VHA authorized distributors compared to purchases from other distributors. The matrix will result in fees ranging from 3.75% to 7.5%, Mr. McKenna said. Because of the combination, some small hospitals could come out winners, too, he said.
As more hospitals link in regional delivery networks, the question of whether purchasing groups cater to small or large hospitals will fade, said Thomas Hughes, president of Concepts in Healthcare, an Ashland, Mass.-based materials management consulting firm.
"It's going to be how you handle a group of hospitals," Mr. Hughes said. "Now the VHA is positioning itself. Groups are really looking at getting away from cost-plus relationships."
VHA also established criteria its distributors must meet. Those include financial stability; operational requirements, such as a disaster plan; defined and costed "stockless" and "just-in-time" delivery programs; and the use of information systems.
VHA's five authorized distributors will take over distribution of its pri-vate-label product line this week so that hospitals can buy all VHA medical-surgical supplies from one source.
Deerfield, Ill.-based Baxter International, which is not among the five authorized distributors, had distributed the line under a contract that began in January 1992. The contract was valued at $500 million through 1994, Baxter said. About 70% of its value came from Baxter's manufacture of custom kits and procedure trays for the line, which will continue, the company said.-Lisa Scott