Sisters of Providence Health System in Seattle has agreed to switch allegiances to the VHA hospital alliance from rival Premier, MODERN HEALTHCARE has learned.
"Sisters of Providence has made a decision to disengage from Premier and to work with VHA," confirmed Larry Dickson, systemwide director of materials management at the Seattle-based provider. "We've received a lot of value from Premier," he said. "It's a much larger question than group purchasing alignment."
Six months in the making, the decision by one of the most influential health systems in the West is another blow to the Premier alliance and establishes a beachhead for VHA in the Northwest, where the alliance has not been a significant player. Recently, long-time shareholder Beth Israel Health System in New York also left San Diego-based Premier (March 30, p. 4).
Sisters of Providence's decision to exit Premier stemmed largely from a conclusion that the alliance had fallen behind VHA, its main rival, in several key strategic areas, including information technology and physician support, said sources familiar with the analysis who spoke on condition of anonymity.
Premier, for its part, downplayed the loss.
"Sisters of Providence in Seattle has never been an owner" in the alliance, said Jack Bernard, vice president for owner and affiliate services at Premier headquarters in San Diego. Instead, Sisters of Providence has bought supplies through Premier as an affiliate instead of a shareholder. "Affiliates come and go," Bernard said. "We probably add and delete five or 10 every month. The ties are not as binding."
But Sisters of Providence is not the average affiliate. With 15 hospitals, about 3,500 acute-care beds and $2.5 billion in annual revenues, it's one of the country's largest not-for-profit systems. In addition, it has been aggressive in expanding into managed care, although it recently was fined for alleged violations of insurance laws in Washington state (See story below).
Executives at Irving, Texas-based VHA are expected to announce their coup sometime this week. Further sweetening the victory, Sisters of Providence is expected to become a full-fledged shareholder in VHA, rather than an affiliate.
Meanwhile, Premier is forging ahead, adding new shareholders and affiliates faster than others leave.
Since the 1996 merger of the original Premier, American Health Systems and SunHealth Alliance, the new Premier has had a net addition of 76 owner hospitals, according to Bernard.
`The most recent addition is Mercy Health System of Chicago, which joined Premier as a shareholder late last month.
Separately, Premier said last week that Bary Bailey, 39, has been named executive vice president for finance, a new position. Bailey takes over the responsibilities of recently deceased Anthony "Tony" Moreno, who had been Premier's chief financial officer. Besides his new role, Bailey will keep several of his current responsibilities, including overseeing Provider Select, a new group purchasing venture for physicians.