Volume 15| February 28, 2018
Insights-Trends-Opinions
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Don’t ask the barber whether you need a haircut!
When a big merger or acquisition is announced, I am often asked two questions:

  1. What stakeholder is benefiting from this transaction?
  2. Is this lowering the cost of care?

I struggle with both questions. I do know it usually makes a bigger organization that at least one of the architects of the deal get to run.

This week, Paul Keckley does a great job exploring that very topic:

Once a CEO hungers for a deal, he or she will never lack for forecasts that justify the purchase. Subordinates will be cheering, envisioning enlarged domains and the compensation levels that typically increase with corporate size. Investment bankers, smelling huge fees, will be applauding as well. (Don’t ask the barber whether you need a haircut.) If the historical performance of the target falls short of validating its acquisition, large “synergies” will be forecast. Spreadsheets never disappoint.

Check out this week's column, it is a great read.

New research shows providers value distribution’s role
Almost 90 percent of IDN and hospital supply chain executives are satisfied or very satisfied with their distribution partner, according to a recent HIDA survey. Below are some key findings from the upcoming report.

A majority of hospital and health system supply chain executives think their prime vendor distributor partner adds value to the supply chain. Distributors’ ability to streamline ordering and procurement was the top benefit identified. “We value the availability of a large selection of items,” said one Chief Financial Officer from the Southwest. “We never know what new item we are going to need next.”

Fifty-three percent of respondents identified supply chain cost reductions as the top advantage of using distribution. Some respondents noted that buying direct can increase total costs: most suppliers have specific order level or delivery requirements, or charge additionally for shipping/freight – which is not always reflected on product list prices. “Small utilization of some products still makes using medical-surgical distribution models work for us,” said one Vice President of Supply Chain in the South. “We avoid small orders with large shipping cost, i.e. cheaper to use local distributor for low volume items.”

Baylor Scott & White Health renews agreement with Vizient
“We are excited to continue to work with Baylor Scott & White Health, the largest non-for-profit health system in Texas..." said Rand Ballard, Chief Customer Officer for Vizient.

In addition to renewing its group purchasing agreement, Baylor Scott & White Health will continue to leverage Vizient pharmacy analytics.

Baylor Scott & White consists of:
  • 50 Hospitals
  • 1,000 Access points
  • 7,800 Active physicians
  • 48,000 Employees

Bon Secours and Mercy to merge and create fifth largest Catholic IDN
Here is the new organization by the numbers:
  • Top 20 IDN, 5th largest Catholic
  • $8b in Net Operating Revenue
  • $293m in Operating Income
  • 57,000 Employees
  • 2,100 Employed Physicians
  • 43 hospitals, 1,000 care sites
  • 10 million patient encounters
  • Servicing part of 7 states

In the coming months, both parties will work together to finalize a definitive merger agreement, obtain applicable approvals, and complete plans to merge. While there is no specific date outlined, executives at both Mercy Health and Bon Secours expect to complete this merger by the end of the calendar year.



Steward Health Care relocating HQ to Texas
Real estate sources say Steward Health Care System plans to move its corporate executive team of roughly 100 from the northeast United States to Dallas.

This would make downtown Dallas ground zero for the company's growing operations, which, according to the  Boston Globe , is expected to turn around nearly $8 billion in revenue this year.

Chris Torres of Main Line Health named Contracting Professional of the Year
For Chris Torres and her team at Main Line Health, supply chain management and clinical resource management are a package deal.

The supply chain executive as a utilization and waste management consultant? “Yes,” says Torres, System Vice President, Supply Chain and Biomedical Engineering for Main Line Health, Radnor, Pennsylvania.

“Some folks focus on cost. In my mind, it’s not the price [of supplies and equipment] that’s most important. It’s how we use it and how we can not waste it.”

To tackle those issues, the supply chain executive and his or her team have to work hand in hand with clinicians, with trust, openness and respect, she says. That is every supply chain executive’s duty. Some – like Torres – had a head start.


Do you understand Partner Advisory Councils? The next level of supplier collaboration.
Partner Advisory Councils are becoming more common. Are you involved in any?

More and more National Account Executives are asked to play an advisory role for progressive IDNs that want to learn and collaborate with their suppliers.

Ed Hardin of Beaumont Health takes vendor relationship management seriously and has done just that!

Apple is launching medical clinics to deliver the 'world's best health care experience' to its employees
Apple  is launching a group of health clinics called AC Wellness for its employees and their families this spring, according to several sources familiar with the company's plans.

The company quietly published a website,  acwellness.com , with more details about its initiative and a careers page listing jobs including primary care doctor, exercise coach and care navigator, as well as a phlebotomist to administer lab tests on-site.

You have to wonder how similar or different this model will be to what Amazon, JP Morgan and Berkshire are planning.

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John Pritchard


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