HomeTown Health
Group Purchasing Organization
Overview
April 29, 2010
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About HealthTrust
• We are a Group Purchasing Organization (GPO)
 Established in 1999
 Offering contracts in the areas of supplies, pharmaceuticals, medical
devices, capital equipment, HR and other service-related offerings
• Membership includes over 1,400 acute care hospitals and
440 surgery centers
• 99% member retention rate
• “Patients first” mission. All contract decisions are approved by the
appropriate clinical advisory board
• We leverage our members’ $17 billion of annualized
compliant purchasing volume to negotiate the lowest pricing
in the industry
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Annual Sales Volume
$18.0
$17.0
$16.0
$14.1
$14.0
$12.0
$9.8
$10.0
$8.0
$7.6
$8.5
$6.5
$6.0
$4.0
$2.0
$0.0
2004
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2005
2006
2007
2008
2009
Unique Combination of Members
Equity IDNs
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For-Profit
Non-Profit
Alternate
Sites
Key differentiator: Industry-leading Pricing
We have grown from $4 billion to
$17 billion in 10 years. Why?
• Lowest Pricing in the Industry—
as measured by our customers
• Over the past 18 months of due
diligence, the average price savings
for our customers versus other
GPOs has averaged 7%
• One Price For All — with marketshare tiers and SIPs
• Sustainable Model — driven by a
“patients first” mission, an aligned
membership, and executed with a
provider-centered perspective
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Internal Due Diligence
Prior 18 months
30%
25.6%
25%
20%
15.0%
15%
9.7%
10%
10.5% 10.7%
6.9%
5%
0%
GPO GPO GPO GPO GPO GPO
A
B
C
D
E
F
Consorta Transaction
• Consorta joined HPG as equity partner in 2007
– 11 not for profit companies with 186 acute care
hospitals and hundreds of alternate sites and clinics
• Renegotiated or “refreshed” the contract portfolio
over a year and a half to:
– Create incremental price savings due to additional
committed volume.
– Shrink contracting cycle
• Results:
• Over $9 Billion spend was “refreshed”
• 4.22% savings ($390 Million to existing members)
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Compliance
• Compliance = Savings
• Compliance Measurement
– 80% of total facility supply spend should go through HT
(if covered under HT contract)
– Not contract specific although some contracts have %
requirements to achieve tiers
• Exclusive GPO – can not belong to other GPO
• Contract Status – Sole, Dual, Multi, Optional
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Key Differentiator: Rigorous Clinical Review
Nursing
Food &
Nutrition
Laboratory
Radiology
Pharmacy
Informatio
n Systems
Supply
Chain
Surgery
Cardiology
HealthTrust’s “Patients First” philosophy drives
all contractual decisions and clinical programs
• Goal


“Patients First” mission
Evaluate and determine suppliers / products that meet only the highest
clinical standards in every category
• Clinical Advisory Board — Form and Function




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Nine standing advisory boards – led by licensed clinicians
Ad-hoc boards and member summits
Average 15 members / three-year rotating terms
Refresh approximately 250 categories per year
Key Differentiator: Rigorous Clinical Review
Nursing
Food &
Nutrition
Laboratory
Radiology
Pharmacy
Informatio
n Systems
Supply
Chain
Surgery
Clinical Review Process
•




Facility-level clinical evaluation
Solicit input across membership
Follow standardized processes, e.g. scoring matrices
Utilize outside reference sources (ECRI, SG2, AORN, AAMI) to
compliment new technology assessments
New Technology Assessment and Information
Clinical Education and Implementation Support
Environmental Sustainability Program
•
•
•
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Cardiology
Key Differentiator: Broadest Contract Coverage
• Comprehensive portfolio
 Medical/Surgical, Commodities and Distribution – Sole agreements or
dual/multi-source with standardization incentives (SIPs), where possible
 Capital Equipment – Everyday best-pricing with Group Buy opportunities
 Pharmacy – Portfolio includes branded contracts with progressive
therapeutic initiatives and sole-source generic awards
 Food – Pool Healthtrust volume with Sodexho (Entegra) to further enhance
pricing and rebates
 Non-Clinical – Coverage for all provider spend, e.g. I.T., HR benefits,
energy, parcel, office supplies, etc.
• Medical Device Sourcing Solutions
 National agreements for cardiovascular – customized for members
 Provide strategic sourcing for all orthopedic categories
 Process steps include: data capture, spend utilization, reimbursement
evaluation, benchmarking, strategy development, physician engagement and
contracting
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Key Differentiator: Operations Expertise
• Account Management – supporting daily operations
 Managers are experienced supply chain and clinical professionals
 Responsible for overall relationship, support of implementation,
contract conversions, compliance and savings opportunities
 Quarterly business reviews
 Customer Service call center – Issues are logged, tracked for
resolution and trended for root cause analysis and vendor
accountability
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Integrity & Culture
• Unsurpassed Ethics and Compliance
 Admin fees do not exceed 3% allowable by OIG Safe Harbor
Guidelines
 No private label programs
 No financial investments or ventures with suppliers
 Officers have no stock or options in any supplier
• Healthcare Group Purchasing Industry Initiative (HIGPII)
 Founding member
 Established to promote and monitor best ethical and business
practices
 Requirements:
• Open and competitive purchasing process
• Maintain written business code of conduct
• Public accountability
• Commitment to supplier diversity and small companies
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System Tools & Resources
Member Web site – (SCRUBS)
• News & key resources
• HT University – Continuing Education
Online Catalog – (CatScan)
• Line item pricing at individualized
facility level (your Tier)
• Customized Distributor Markup
• Contract or Item Export Capability
• Normalized Product Descriptions
• UNSPSC Codes
Electronic Letters of Commitment (CCM)
• Electronic exchange directly between the
facility and vendors
• Multiple workflow options
• E-mail notifications of activity
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Rebates
• All rebates are paid to HPG. They are processed
and sent to facilities monthly
• 100% are returned to facilities (must be reflected
in cost reports)
• Extensive projection and tracking system
• Monthly and YTD detail reports including contract
and associated sales are available on-line
• HPG has more rebates then other GPOs, keep this
in mind during conversions. Approx 19% of
contracts have rebates
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Audit
• 5 areas of focus - pricing, rebates, membership,
freight, admin fees.
• Yearly plan based on risk factors –
complexity of contract, highest spend, prior audit
results, management requests, CS calls, years
since last audit
• 2009 Results
– Reviewed $3.5 Billion spend
– Recovered $10.8 Million in 2009
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Spend Analytics
•
•
•
•
•
Two components: the tool and the operational expertise
Selection of BravoSolution as best-in-class
Pilots in process – full release scheduled Q2, 2010
Cost will be below market competitors
Functionality will include:

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Price auditing
Optimization reports
Compliance / coverage reports
Future Phase –
 Benchmarking
 Cross-reference database
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Additional Services
• Supply Chain Consulting - driving operational improvements
 Supply Management Action Teams – Value Analysis Integration
 Operations Assessments
 Shared service and consolidated Service Center operations and financial
reporting
• Labor Management
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Management of contract labor
Nurse and allied health recruiting
Certification and training at deep market discounts
Scheduling technology, A/P management and productivity tracking
• Alternate Care – AdvantageTrust


Leveraging acute care pricing to serve non-acute market
Portfolio offerings for distinct classes of trade
•
Long-term care, physicians clinics and home health
CoreTrust Purchasing Group
• Objective
 Extend portfolio value to other industries (growth)
 Add purchasing volume (leverage) to further enhance price advantage for
all members
• 140 current members
 $600M in Committed Volume
• Case Studies
 Office Supplies – $70M to $200M in three years – largest Staples customer
 Car Rental – $5M to $25M in three years. The incumbent, Hertz, lost but
became a CoreTrust member
Some member companies include:
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THANK YOU
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