Baxter International and Value Health agreed in principle to form a new company to manage hospital pharmacies, among other services.
The pharmacy company also would market pharmacy software and medication-process management, which are now being piloted.
A definitive agreement is expected shortly. The joint venture hasn't been named.
Deerfield, Ill.-based Baxter plans to spin off several business units later this year into a $4 billion cost-management company, which will own its interest in the joint venture.
As part of its cost-management services, Baxter has been testing a new offering called medication-process management.
The medication process in a hospital is the determination of medication for a patient, preparation and labeling by the pharmacy, distribution to the point of use, administration, and patient response.
Under three- to five-year contracts, the joint venture will supply hospitals with an on-site "process manager" to reduce the total cost of the medication process, said John Hart, a Baxter executive. For example, the process manager might coordinate the development of protocols for antibiotic use.
In return, the joint venture will take a cut of the savings.
U.S. hospitals spend about $15 billion a year on pharmaceuticals and $50 billion more to manage their use, including responding to medication errors, according to Value Health.
Avon, Conn.-based Value Health is contributing HPI Health Care Services and PreciseCare to the joint venture.
HPI is the second-largest manager of hospital pharmacies. The business has 135 management contracts, including 55 with hospitals, and has annual revenues of about $70 million. HPI was part of Diagnostek, which Value Health acquired in 1995 for about $480 million.
PreciseCare is a software system developed by a Value Health subsidiary, Medintell, to reduce medication errors and waste. Medintell won't be part of the joint venture, a Value Health spokeswoman said.
Baxter and Value Health will own equal shares of the new company. The venture will be headed by Value Health executive Kevin Roberg and likely will be based in Minneapolis.