The Big 10: The 10 largest groups reported 1995 purchasing of $31.5 billion to $31.7 billion. National Purchasing Alliance estimated its buying at $800 million to $1 billion. University HealthSystem Consortium, the only Big 10 group not participating in the survey, reported its purchasing and was included in the total. Premier was treated as a single group in 1995, even though its three founders didn't officially merge until Jan. 1, 1996. It was treated as three separate alliances in 1994. Thus, Catholic Health Materials Management Alliance and National Purchasing Alliance weren't Big 10 members in 1994, and 1994 Big 10 buying was calculated as $25.5 billion.
Total market: SMG Marketing Group, Chicago, estimated total spending on supplies by nonfederal hospitals at $52 billion in 1994 based on a review of hospitals' Medicare cost reports. Supply expenses were calculated by eliminating costs unrelated to supplies (i.e. wages, benefits, repairs, maintenance) from a total expense figure. MODERN HEALTHCARE assumed the 1995 market was $52.8 billion based on a 1.5% historical inflation rate for supplies.
Other buying groups: Two other significant buying groups also didn't respond: MAGNET, Harrisburg, Pa., and Sisters of the Sorrowful Mother-Diversified Health Services, Milwaukee. Nine groups pool a variety of purchases through MAGNET. Many also negotiate their own contracts. Because not all MAGNET members responded, an estimate of their total spending-$2.2 billion-provided by MAGNET was used in calculations. Diversified Health Services estimated its purchasing on the condition it be kept confidential. Responses were screened to eliminate double counting when one group uses another's contracts but both claim the volume. Thus, the 1995 buying of all groups was estimated at $36 billion.
Other considerations: Columbia/HCA Healthcare Corp. isn't counted as a group because it doesn't solicit memberships and purchases only for owned hospitals. It spent about $2.6 billion on supplies in 1995, its annual report said. For the same reasons, Kaiser Permanente wasn't included as a group, although it recently consolidated its regional supply purchases into a national office. Excluding pharmaceuticals, it spent $1.2 billion on supplies in 1995. Federal hospitals aren't included in the market analysis. The National Acquisition Center and the Defense Personnel Support Center, the largest federal buyers, spent about $3.3 billion on medical supplies in 1995.
Interpretation of data: Analysts, manufacturers and purchasing groups confirmed the results as a good estimate of the marketplace, plus or minus 5%. Unlike the SMG data, the groups' responses include spending under group contracts on services such as collections and personnel recruitment. The discrepancy most likely is insignificant.