Reflecting Roman Catholic healthcare organizations' desire to work in closer partnership, two purchasing groups will create a new company with nearly $2 billion in buying power.
The boards of St. Louis-based Catholic Materials Management Alliance and Milwaukee-based Sisters of the Sorrowful Mother-Diversified Health Services last week signed a letter of intent to consolidate into one firm that will do business in 35 states. A dozen Catholic health systems and their 289 acute-care hospitals and 127 long-term-care facilities will purchase goods and services through the new alliance.
"What we are trying to achieve is a complete market segment, which is the multihospital system segment," said Jon T. Beste, chairman of SSM-DHS and vice president of planning for Ministry Health Care of Milwaukee, an SSM division.
Executives said they hope other systems will join the new group once it's up and running. It's expected to be operational early next year.
"We hope that other Catholic systems will find this new organization to be an attractive model for collaboration," said Gary Farnes, chairman of CMMA.
The Catholic combination takes place against the backdrop of consolidation among secular purchasing groups, such as the three-way merger that produced Premier in 1996. It also comes as Catholic healthcare systems are merging to strengthen their ministry.
"It was inevitable that something like this would happen," said Tom Brull, purchasing director at Holy Family Memorial Health Network, Manitowoc, Wis., an SSM-DHS member. "Lining up with another Catholic organization can only be a plus, and our strength will be in the (bigger purchasing) numbers. Overall, I think it's a good move."
Realizing the promised synergies, however, will take time.
"We first need to meld these two programs together to a point of stability," Beste said.
In 30 purchasing areas where SSM-DHS has high-volume usage, its compliance rate is "above 80% and in the very high 90s," Beste said. CMMA has a similarly high compliance rate.
A business plan as well as a name and location for the new group have yet to be determined.
Systems purchasing through CMMA and SSM-DHS are: Alverno Health Corp., Mishawaka, Ind.; Ancilla Systems, Hobart, Ind.; Catholic Health Initiatives, Denver; Daughters of Charity National Health System, St. Louis; Franciscan Health Services, Albany, N.Y.; Holy Cross Health System Corp., South Bend, Ind.; Hospital Sisters Health System, Springfield, Ill.; Ministry Health Care; St. John Ministry Corp., Tulsa, Okla.; Via Caritas Health System, Wayne, N.J.; Via Christi Health System, Wichita, Kan.; and Wheaton (Ill.) Franciscan Services.
-With Scott Hensley