In one fell swoop, group purchasing organization Consorta Catholic Resource Partners boosted its membership 10% by signing up the nation's third-largest Catholic healthcare system, Trinity Health, Novi, Mich., last month-at the same time that the Premier purchasing alliance all but lost Trinity as one of its 200 owners.
Trinity, which owns 29 hospitals, and the Rolling Meadows, Ill.-based GPO, whose shareholders are primarily Catholic-sponsored hospitals and health systems, have forged a four-year contract to explore newer and potentially controversial territory: customized contracting.
The strategy is designed in part to take advantage of the power wielded by hospitals banding together to purchase supplies by giving brawny integrated delivery networks such as Trinity exclusive opportunities to negotiate their own deals-hopefully with even larger volume discounts and lower costs.
"We certainly think this presents a new opportunity within group purchasing, and it can create a new platform for value for the supplier, the group and the provider," said John Strong, Consorta's president and chief executive officer.
Since Trinity was created in May 2000 through the consolidation of Holy Cross Health System, South Bend, Ind., and Mercy Health Services, Farmington Hills, Mich., the integrated delivery network has been evaluating its GPO agreements. The combined system purchases $1.4 billion in supplies annually, with $454 million of that flowing through GPOs, said Mary Jo Herbig, a Trinity spokeswoman. The system turned a thin 0.5% profit on $4.2 billion in operating revenue in fiscal 2000, ended in June.
"We felt that as a system, we could make a commitment to volume to achieve lower pricing, so we were looking for a GPO that could respond to Trinity's size," Herbig said.
When Trinity landed on the idea of customized contracting, it made a request for proposals to all three of the GPOs through which it purchased: Consorta, Mercy Resource Management and Premier. Although Premier bid on the contract, it stepped aside after realizing that Trinity's new strategy was not a perfect fit with Premier's, said Pat Poston, a spokeswoman. Premier's strategy gives all members equal access to group contracts, she said.
