Premier will become the preferred group purchasing organization for the 275 hospitals that comprise America's Essential Hospitals.
Under terms of the agreement, Premier will provide the hospitals best practices for clinical and population health management services. Premier will also collaborate with America's Essential Hospitals to create new models that target the unique needs of member hospitals, most of which are large, urban academic medical centers that can often find themselves financially strapped.
Financial terms of the agreement were not disclosed.
Susan DeVore, president and CEO of Premier, said the partnership will lead to cost savings for the hospitals because the firm will offer analytic tools and collaborative support to thrive in an evolving reimbursement climate.
Hospitals will also have access to Premier's programs like Quest, a national quality-improvement program that requires members to use proven methods of quality, safety and efficiency. The program has resulted in $15 billion in cost savings for approximately 350 hospitals.
Projected cost savings from the partnership were not disclosed. The deal is not expected to affect Premier's fiscal 2017 earnings.
In the evolving value-based reimbursement climate, it's tougher for hospitals to control costs, said Bruce Siegel, president and CEO of America's Essential Hospitals. He said Premier's services will be an asset for member hospitals because it will allow them to better navigate industry changes.
“These are very challenging populations and at the same time we have lower Medicaid reimbursement, and we still have millions of people without coverage,” Siegel said. “Part of our job is to find a way to manage patients better and smarter to prevent them from getting sick in the first place.”