Johns Hopkins Health System Corp. has switched to Vizient as its group purchasing organization a little over a year after a Vizient board member took over as president of the academic medical center.
The Baltimore-based system, which drew $6.6 billion in operating revenue in its fiscal 2018, previously had a five-year contract with Vizient's competitor, Premier, another leading group purchasing organization.
Johns Hopkins Health System named Kevin Sowers its president effective Feb. 1, 2018. He's also executive vice president of Johns Hopkins Medicine. He joined Vizient's board in December 2016.
Johns Hopkins spokeswoman Kim Hoppe wrote in an email that Vizient does not pay Sowers to serve on its board, and that Sowers disclosed the relationship when he became president. The health system used a third-party consultant to pick a GPO vendor, and Vizient's bid was chosen by an internal committee. Sowers recused himself from the decision, which was ultimately made by Dr. Paul Rothman, CEO of Johns Hopkins Medicine, Hoppe said.
Vizient spokeswoman Angie Boliver wrote in an email that members are always free to choose their GPO partner based on which one best meets their needs, and Sowers fully disclosed the potential conflict of interest to both the Vizient board and his employer.
"Of course, we are incredibly proud to have been selected by an institution so prestigious as Johns Hopkins," she said.
Boliver added that Vizient has never paid its provider-based board members. Premier, by contrast, pays handsomely for the work. Banner Health CEO Peter Fine, for example, received $221,000 for his role as a director, according to the company's most recent proxy filing. Adventist Health's Scott Reiner scored $191,750 in total compensation for serving on the board.
Prior to joining Johns Hopkins, Sowers was at Duke University Health System for 32 years, most recently as CEO of Duke University Hospital. Duke University Hospital participates in Vizient's clinical services, but does not use Vizient's GPO services, Boliver said.
Jamie Orlikoff, president of the healthcare governance consulting firm Orlikoff & Associates, said it's not uncommon for new leaders to enter organizations, assess their vendor relationships and suggest changes. It's unclear whether that happened in this case.
"That's kind of part and parcel of executive privilege," he said.
On its face, Orlikoff said he doesn't see any conflict with Johns Hopkins switching to Vizient. When it comes to health systems' relationships with GPOs, the real issues can stem from services they offer outside of their GPO segments. If a Johns Hopkins competitor wanted access to a service Vizient offered, Orlikoff wondered whether Sowers would play a role in that decision. The answer depends on whether Vizient has policies that prohibit directors from making decisions when conflicts exist.
"Then you get into competitive issues: How do you isolate board members from the decisionmaking processes which may represent conflicts for them?" he said.
Sowers had temporarily taken over leadership of Johns Hopkins All Children's Hospital in St. Petersburg, Fla., which has been removing senior administrators after at least 11 children died following pediatric heart surgeries over an 18-month period starting in mid-2016.
In a statement, Premier spokeswoman Amanda Forster wrote that Premier has won nearly 30 clients from Vizient since 2014 representing 100 facilities.
"In the case of Johns Hopkins, the system recently experienced a leadership change, bringing in a new president who sits on the Vizient board of directors," she said. "Given this dynamic, their decision to change GPOs was not entirely unexpected, nor does it materially affect Premier's expected performance."