In a painful setback for Premier's aggressive group purchasing strategy, Beth Israel Health Care System in New York has left the alliance it helped to found, MODERN HEALTHCARE has learned.
The decision by prestigious 1,343-bed Beth Israel to flee the Premier buying fold apparently stemmed from dissatisfaction over the constraints of the alliance's mandatory purchasing portfolio.
Beth Israel had been a member of the original Premier alliance since 1985 and stayed on board through its 1996 merger with American Healthcare Systems and SunHealth, which created the current Premier alliance.
Beth Israel said in a statement: "We believe it is in the best interest of our delivery system to withdraw from Premier and explore other purchasing options."
Premier executives were not available for comment at deadline.
In January 1997, St. Luke's-Roosevelt Hospital Center joined with Beth Israel to create Continuum Health Partners, an operating company that has bought supplies through the Greater New York Hospital Association. St. Luke's-Roosevelt was not a Premier member.
A spokeswoman for the GNYHA, which markets the Premier portfolio to New York area hospitals, expressed disappointment in Beth Israel's decision, which means supply purchases would no longer go through the association.
Continuum Health declined to discuss its plans for purchasing. "We're looking at several options right now," a Beth Israel spokesman said.
But Continuum Health's consideration of alternative purchasing routes has already resulted in an unorthodox buying agreement being struck with the New Jersey Hospital Association. In a contract that takes effect this week, Continuum Health will buy drugs and pharmaceutical services through the NJHA's group purchasing arm, rather than through the GNYHA. Financial terms were not disclosed.
William Kennedy, vice president for corporate services at the NJHA, credited Continuum Health's decision to buy through an out-of-state hospital association to its "strong contract pricing coupled with the flexibility to customize our program to meet (their) special needs."
The NJHA's portfolio of medical-surgical supply contracts is not covered under the agreement. Continuum Health is likely to contract for those products independently, Kennedy said, and may ultimately develop a supply portfolio that it would market to unaffiliated hospitals.