News | April 21, 2011

Twenty-Eight Health Care Systems In Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island And Vermont Form Northeast Purchasing Coalition LLC

New VHA Supply Network Expects to Reduce Supply Costs, Paves the Way for Improved Supply Utilization

Irving, TX (Marketwire) - Twenty-eight health care systems representing more than 100 hospitals in six New England states have come together to form a new company, the Northeast Purchasing Coalition LLC. The hospitals, all members of VHA Inc., the national health care network, represent almost 17,000 hospital beds, 5,000 physicians and more than $2 billion in combined annual supply-related, non-salary expenses.

These organizations will work together, and with VHA, to lower costs by aggregating purchasing volume on contracts, decreasing product utilization and incorporating clinical subcommittee recommendations into their decisions. VHA's regional office in Braintree, Mass., will serve as the hub for the regional purchasing coalition.

With declining reimbursements and rising costs, this collaborative approach to non-salary cost reduction will help ensure hospital resources are preserved for direct patient care. The coalition's members plan to leverage VHA's contracting support and supply chain management expertise to obtain better pricing on aggregated purchases.

The boards of directors of VHA New England and VHA Northeast applied their collective strength and enthusiastically endorsed this endeavor as an innovative way to reduce their non-salary expenses and provided essential executive-level support.

"If we are not able to drive costs down, health care will quickly become unaffordable for most people," said Daniel B. Coffey, executive vice president, treasurer and CFO for Eastern Maine Healthcare Systems as well as chair of the NPC Board of directors. "The most effective way for hospitals to increase quality while decreasing expenses is to work collectively. The NPC has incredible potential to remove costs and decrease non-salary expenses by reducing operational inefficiencies and leveraging an enormous amount of buying power."

"Hospitals are pressing hard to find new ways to save money and deliver efficient care without cutting staff, limiting services or sacrificing clinical quality," said Gerry Roche, area senior vice president/executive officer for VHA Northeast and VHA New England. "By aggregating volume through VHA SupplyNetworks™, our members can zero in on standardization opportunities and establish a platform to discuss clinical utilization, that both hold significant potential for savings and higher quality of care. VHA SupplyNetworks also create opportunities for operational efficiencies that aren't available through any other means in the health care industry today."

Representing a strong commitment to collaboration among these hospitals, the NPC will be operated by a committee of supply executives recruited from the NPC's members who will develop the strategies, guidelines and processes to ensure the group can reach their savings objectives. The members have agreed to abide by the following principles:

  • A defined purchasing decision making process
  • Volume-aggregated contracting strategies
  • Member commitment
  • Sustained contract compliance

Members will retain the ability to make independent decisions about product purchases but have agreed to aggressively pursue product standardization whenever possible in order to achieve dramatic cost savings.

On average, hospital members of VHA SupplyNetworks save between 8 percent and 12 percent annually through network contracts that enable members to:

  • Gain better control over the entire supply chain
  • Achieve savings above and beyond what they could accomplish on their own
  • Share and learn best practices from other participants

In their most mature form, VHA SupplyNetworks help members pursue higher value activities such as centralized ordering and centralized logistics. Supply networks also provide innovative platforms for utilization discussions because their collective intelligence enables the hospitals to reach a clinically supportable consensus that should lead to better clinical performance.

VHA currently supports 25 VHA SupplyNetworks nationwide. In 2010, these supply networks saved participants $100 million.

Northeast Purchasing Coalition Members:
Beth Israel Deaconess Medical Center, Boston, Mass.
Cape Cod Healthcare, Inc., Hyannis, Mass.
Care New England, Warwick, R.I.
Day Kimball Hospital, Putnam, Conn.
Eastern Connecticut Health Network, Manchester, Conn.
Eastern Maine Healthcare Systems, Brewer, Maine
Emerson Hospital, Concord, Mass.
Gaylord Hospital, Inc., Wallingford, Conn.
Greater Waterbury Health Network, Inc., Waterbury, Conn.
Hallmark Health Corporation, Medford, Mass.
Harrington Memorial Hospital, Southbridge, Mass.
Heywood Hospital, Gardner, Mass.
Lawrence General Hospital, Lawrence, Mass.
LGH Corporate, Inc., Lowell, Mass.
MaineHealth, Portland, Maine
Mary Hitchcock Memorial Hospital, Lebanon, N.H.
Massachusetts Eye and Ear Infirmary, Boston, Mass.
Middlesex Health System, Inc., Middletown, Conn.
Mount Auburn Hospital, Cambridge, Mass.
Norwalk Hospital Association, Norwalk, Conn.
Rutland Regional Medical Center, Rutland, Vt.
South Shore Health and Educational Corp., South Weymouth, Mass.
Southern New Hampshire Health System, Nashua, N.H.
Southwestern Vermont Health Care, Bennington, Vt.
The Charlotte Hungerford Hospital, Torrington, Conn.
Wentworth-Douglass Hospital, Dover, N.H.
Western Connecticut Healthcare, Inc, Danbury, Conn.
Yale New Haven Health System, New Haven, Conn.

About VHA
VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. In 2009, VHA delivered record savings and value of $1.47 billion to members. Formed in 1977, VHA serves more than 1,400 hospitals and more than 28,000+ non-acute care providers nationwide, coordinating delivery of its programs and services through its 16 regional offices. VHA has been listed as one of the best places to work in health care by Modern Healthcare since 2008 and one of the best places to work in IT by Computer World since 2007.