David Schreiner, chief operating officer at Katherine Shaw Bethea Hospital, says the appeal of banding with other Illinois hospitals to get better aggregate pricing is part of what drove his hospital to leave VHAs GPO, Novation, and join with the IPC. We were not able to fully take advantage of our VHA contract because of our size, Schreiner explains. Were a small, 84-bed hospital, so, on our own, we wouldnt have much luck negotiating better contracts. But with this, we are partnered with other hospitals on purchasing.
Though its too early to project how much, if any, the hospital will save through its IPC affiliation (the agreement began June 1), Schreiner says one area theyve already identified for potential savings is on the purchasing of catheters for its cardiac catheterization laboratory.
But despite what IHA officials describe as sure-footed beginnings for their purchasing collaborative, the group also quickly learned that creating alliances can be tricky and competitive in the world of group purchasing.
Last year, before launching the IPC, the association approached the Metropolitan Chicago Healthcare Councilanother local hospital associationabout joining the collaborative. But the organization, which represents 140 hospitals in the Chicago areaapproximately 100 of which also are associated with the IHAnot only turned down the partnership offer, it ultimately signed its own purchasing arrangement with MedAssets, Alpharetta, Ga., just weeks after IHA announced the creation of its collaborative.
(Earlier this month, the Colorado Hospital Association also inked a deal with MedAssets to create a statewide GPO partnership, becoming the most recent hospital association to create a regional purchasing and value-added services program.) (June 11, p. 14.)
I think there was a different view in terms of what the (supply chain) market challenges were, says IHA Executive Vice President Brian Foster as to why the two organizations didnt come together on their local GPO efforts. They didnt see (the value of) market aggregation in the same way.
Metropolitan Chicagos move to revamp and expand its program (which like the IPCs now includes negotiated savings with national suppliers and access to performance-improvement services such as revenue stream management tools and supply-chain analytics) meant that the IHA would have local competition in persuading area hospitals to sign with its GPO. And since Metropolitan Chicago already had a long-running group purchasing program (it had a 10-year program through Amerinet before joining MedAssets), the IPC would be competing against a more established local GPO for hospital clients.
While that dynamic no doubt caused a bit of angst for the IHA, association officials say they never saw it as a threat to the potential success of the fledgling IPC. Personally, we see choice for our member hospitals as a good thing, Foster says.
Lee Perlman, president and chief executive officer of GNYHA Services, the Greater New York Hospital Associations statewide GPO, has been a consultant to the IPC project since its inception. He says the IHA has accomplished a good deal in its first year and is on target for meeting the purchasing collaboratives three-year goals. He noted that getting 10% of the hospital association membership to support a venture with no track record is no small accomplishment.
He also acknowledged, however, that since those 20 hospitals were already shareholders in Premier Purchasing Partners (a financial relationship that allows them to receive dividends from the national GPO) they already were familiar with the companys services and may have been positively inclined towards the IPC affiliation.