One legacy of the mergers of three group purchasing organizations that became Premier in the mid-1990s was the merged organization having three large offices-in Charlotte, N.C.; Oak Brook, Ill.; and San Diego.
That legacy will be history come 2006, as Premier announced plans last week to shut the Oak Brook office and move "a substantial percentage" of those jobs to the Charlotte office over a two-year period starting July 1.
Modern Healthcare exclusively reported the consolidation in its Daily Dose e-mail newsletter on March 22, a day ahead of the formal announcement.
Premier spokeswoman Gina Clark said the hospital alliance expects cost-savings and improved communications to result from the consolidation. The organization's San Diego headquarters will remain. Charlotte was chosen over Oak Brook because the operating costs there are lower for Premier and the cost of living is lower, Clark said. Premier also believes the quality of life and commuting times are better in Charlotte, she said.
Susan DeVore, president of Premier Purchasing Partners, the group purchasing affiliate of Premier, is based in the Charlotte office. She recently inked a new seven-year contract between Premier and the Greater New York Hospital Association (March 22, p. 6).
The consolidation will allow the company to cut out the travel between the two offices for meetings, Clark added. However, Premier refused to say how much it expects to save because, she said, there are still too many undetermined factors that could affect the level of savings. "This was not an easy decision because it affects people's lives, and we're not minimizing that at all," Clark said. "It's the right decision from a business perspective."
For-profit Premier, which is privately held by about 200 not-for-profit hospitals and health systems, has reported growing profits in the last two fiscal years ended June 30. For fiscal 2003, Premier reported profits of $204.6 million on revenue of $392.3 million, up from profits of $159.2 million on $379.2 million in revenue in fiscal 2002. The bulk of the revenue and profits is generated by the group purchasing division. Premier distributed $182 million of its 2003 profits to its shareholders and $137 million in 2002. Premier does not disclose its full-financial statements to the public but does post a summary of results on its Web site.
The Oak Brook office's 270 employees largely work on group purchasing matters. Clark refused to be more specific other than to say "a substantial percentage" of these jobs would move to Charlotte. That office employs 400, with the largest number working on Premier's clinical and operational data management services. Other corporate support functions, including human resources and corporate communications, are also housed there.
Premier believes its hospital clients will see a direct impact on their clinical efficiencies from the greater integration of Premier's group purchasing and data management staff members, Clark said. For suppliers, the focus of their relationship with Premier will shift from Oak Brook to Charlotte, she said. For both groups, she added, there is still a strong network of Premier employees in the field.