Premier Health Alliance began in 1983 as the Consortium of Jewish Hospitals when 16 Jewish-sponsored tertiary centers decided they needed a formal forum to work out common concerns.
Two years later, the Westchester, Ill.-based group became Premier Hospitals Alliance to reflect the addition of non-Jewish members. The group renamed itself again in 1993 as many members sought to become healthcare systems instead of single hospitals.
Today 55 hospitals and health systems own Premier. In sum, it represents more than 280 hospitals that will purchase $2.3 billion under its contracts this year.
Led by Alan Weinstein since its founding, Premier has performed well financially. In 1994, it earned profits of $3.9 million on revenues of about $28 million.
The for-profit cooperative will dole out more than $5.2 million in dividends to its owners this year, its highest return ever. Since 1986, Premier has distributed $16.7 million in patronage dividends.
The alliance was the first to calculate a value index for its owners, which it began in 1986. This year, its puts the average return at $12.50 for each $1 invested.
Premier also preceded other national alliances in its development of a committed buying program. In 1994, it designed a program to reward hospitals for buying more products under contract. A purchasing group's negotiating strength is largely determined by its members' compliance with contracts.
Under its program, hospitals vow to buy at least 80% of applicable products under five national contracts and the same percentage under five contracts of their choosing. In return, they receive prices 12% lower, on average, than other Premier contracts (Sept. 26, 1994, p. 52).