The Journal of Healthcare Contracting

VHA

Editor’s note: VHA, like UHC and Provista, uses the Novation group purchasing program. Many of the responses below pertain to Novation.

How compliant are your members to your contracts? How do you measure this? And what are your goals in this regard?
Novation’s contracting philosophy is one of voluntary participation -- no mandatory contracts and no penalties. Members are free to choose their level of participation in programs and services based on what best fits their organization’s needs. Over the past five years, member contract participation has increased from $23.6 billion to $33.1 billion. Novation leads the industry in committed volume through our standardization programs. We have nine programs that provide sustainable, long-term financial value through commitment. These programs deliver value while offering flexibility, a platform for process improvement, and a broad selection of contracts for key product areas of standardization.

Can you describe VHA’s approach to capital equipment contracting (e.g., reverse auctions, group buys, etc)?
The capital equipment portfolio covers approximately 85 percent of member capital purchases, encompassing 300 agreements over an array of product categories. Novation agreements address the total capital equipment process to include group buys and life cycle costs, including acquisition, installation, warranty, maintenance, training and equipment disposal. Novation’s turnkey approach helps members with expansion and renovation projects, to standardize the budgeting and planning process; it also aids in contract compliance and provides templates for project-related capital expenditures. Capital budget reconciliations compare members’ capital budgets to Novation’s portfolio, and flag purchasing opportunities. The program has levels, ranging from targeted, nationally focused, initiatives to vendor-sponsored promotions.

Does VHA engage in reverse auctions for non-capital items? If so, to what extent?
Novation utilizes reverse auctions as appropriate for non-capital, commodity-type items. Reverse auction is one tactic Novation occasionally utilizes as part of the competitive procurement process. Each procurement conducted by Novation is reviewed during the planning phase to determine whether reverse auction is an appropriate tactic.

Can you describe VHA’s activities in the following areas:

Environmentally responsible purchasing? As recipient of the H2E Champions for Change Award for the last four years, Novation continues to build meaningful purchasing options for VHA, UHC and Provista, which provide cost-effective and environmentally healthful purchasing options. Novation's Environmentally Preferred Purchasing program involves leading industry advocates and third-party credentialing to ensure multiple system ecological impacts of the healthcare industry as a wholeare realized and understood as to the full extent on human and non-human environments.
Support of minority/historically underutilized businesses? Through its Supplier Diversity Program, Novation and VHA support minority, women and small veteran (veteran, disabled veteran, service-disabled veteran) business enterprises (MWVBEs), and small and local business enterprises. Novation seeks agreements with certified MWVBE medical-type manufacturers, distributors and service providers that meet high-quality standards, and also recognizes its responsibility to its members and the communities they serve. The use of MWVBEs and small and local businesses is a function of Novation’s normal purchasing and supply chain management process.
Making your members aware of - and contracting for - innovative medical technology? Novation monitors the industry pipeline for the latest technology and proactively works with suppliers to ensure that VHA, UHC and Provista members have access to new products as soon as they become available. One example of Novation’s speed to market involves Medtronic’s Endeavor zotarolimus-eluting stent, which was available on contract the day it was approved by the FDA. The speed at which new technology is made available, in addition to the opportunity for suppliers to request consideration as new technology outside the standard contracting process, establishes Novation’s new technology program as the best in the industry.

Does VHA provide outsourced services to your members (that is, services provided by your organization, not by contract vendors)? If so, can you describe them?
Yes, we provide consulting services for both clinical and operational improvement.

Does VHA provide onsite consulting to your members (that is, consulting provided directly by your organization, not by a contract vendor/consulting firm)? If so, can you describe these activities?
Yes, clinical improvement and supply chain performance management consulting, including:

Non-salary cost reduction.
Materials management/logistics.
VHA’s Clinical Quality Value Analysis^TM.
Contract maximization.
Member Shared Resource (MSR).
Pharmacy improvement.
Competitive threats/custom solutions.
Quality documentation improvement.

Does VHA provide members with access to an electronic exchange, allowing members to order products electronically, check order status, check pricing accuracy, etc? If so, what is it called, and what are its capabilities?
Yes. Marketplace offers advanced applications and a variety of tools to help members automate and improve their supply chain processes and maximize contract value through reduced costs. These tools were created to support members through the major steps in the contract management life-cycle: identify savings, implement contracts, manage changes and measure results. Specific tools include:

Novation Contract Catalog: A complete contract management platform assisting members throughout the life cycle of the contracts they use.
Novation Form Manager: Electronic letter of commitment submission and tracking.
My Exchange (GHX): Customized member contract data that allows members to submit orders electronically, check order confirmations and verify availability.

Can you describe the role of member advisory boards in your contracting process?
Novation uses a member-driven, competitive contract process that ensures that qualitative and quantitative factors are considered. Councils and task forces are used as part of the contracting in the following ways:

Provide strategic input.
Evaluate potential product and service areas.
Determine clinical preference and innovative technology.
Score weighting (financial and non-financial criteria).
Score on non-financial criteria.
Validate low-complexity bids.
Guide Novation staff.
Determine single, dual or multi-award.

Novation regularly conducts surveys of members to gain their input, and to gauge member satisfaction and interest levels regarding Novation’s products, programs and services.

To what extent does VHA assist members in local or regional contracting?
Each of VHA's 16 regions manages contracts that are regionally focused. Examples include: supply agreements, education services, managed care contracting and insurance services. VHA offers members custom supply networks, including regional standardization, member shared resource programs, and purchasing coalitions. Our newest and most promising custom supply network innovation is the Consolidated Service Center (“CSC”)....In the CSC model, VHA brings together geographically based groups of members to form single entities, collectively committing to centralized contracting, procurement and distribution and logistics operations.

(Regarding Novation): Novation Custom Contracting meets the demand for flexible contracting services that complement and enhance core contract portfolios without compromising the leverage of volume and commitment that benefits all members. Custom Contracting is engaged by the alliances to support strategically selected members by providing dedicated resources to assist the member in achieving supply chain savings.

Does VHA help members benchmark their clinical performance? If so, can you explain how?
Yes. As part of their membership, VHA hospitals can access a Web portal that gives them insights into their performance against national patient care standards. These report cards help VHA members understand how they perform and highlight areas that need improvement.

Does VHA help members benchmark their operational performance? If so, can you explain how?
Through VHA’s analytic products and services, members obtain deeper insight into their operations, giving them complete information on their total spend, which helps them maximize contract savings, improve clinical performance, effectively engage physicians in product utilization and standardization, and increase staff productivity and work flow. In addition, because of VHA’s regional structure and local presence, sharing best practices through networking and education is an essential component of our business practices. We engage members in operational and clinical performance improvement discussions so they can learn from each other and accelerate change.

Does VHA offer information systems or reports to help members analyze and improve their supply chain performance (e.g., spending, contract utilization, product utilization)? If so, can you describe them?
Through VHA’s Supply Chain Analytics products and services, members receive the insight they need to run an efficient supply operation. We combine the analytical expertise of VHA staff, with the latest technology and our unmatched data assets to deliver [a] robust and compelling set of supply chain management capabilities, which include the following:

VHA’s Global Spend Analysis.
Pharmacy Spend Analysis.
Contract management.
Order management.
Clinical specialty services analytics.
Supply/charge linkage.
Benchmarking supply performance.
Accurate capital planning.

Does VHA offer members resources to help them:

Control the cost or usage of physician-preference items? Through our clinical expertise and world-class analytics platform, we help members reduce costs associated with cardiovascular, orthopedic and spine procedures. We look at clinical, operational and financial issues that help members achieve service line excellence. Using our robust data resources -- including the most extensive, timely and accurate database in the industry -- members have the premium clinical and supply information to link, benchmark and assess specialty service line supply, utilization, cost, and clinical variation information.
Control spending on labor? VHA offers a human resources portfolio that focuses on providing members with the best resources to recruit and retain top talent at discounted prices. Through our partners, VHA helps members resolve issues related to worker shortages, rising turnover and low morale - each of which contribute to higher labor costs. Contracts in this area include clinical staffing (covering nurse, physician and allied staffing), non-clinical staffing (spanning executive placement, administrative and IT functions), computer-based learning systems, and relocation services.
Create and manage a vendor-credentialing process? No

Can you describe the educational opportunities (meetings, conferences, webinars, on-line training) you offer your members?
VHA members have access to regional and national educational conferences, webinars and satellite TV broadcasts, which focus on operational and clinical improvement. A total of 58,713 total CEUs were awarded through these events in 2007. VHA’s Supply Chain Management Institute provides members access to training, education, best practice models, specialized programs, and implementation services to enable excellence and measurable ROI. The VHA 2008 educational series is designed to provide supply chain leaders and hospital executives with access to education, tools and resources to achieve excellence in supply chain management.

Has VHA’s mission changed over the past five years? If so, how?
VHA’s mission has remained constant through the years -- helping not-for-profit community hospitals improve their clinical and economic performance....Novation plays an important role in that effort. VHA changed its business model in 2005 to increase member cash returns and to ensure that members only pay for the services they use. Historically, hospitals have joined VHA or remained members of VHA because of the strength of its supply chain management offerings. Over the last several years, VHA has invested to enhance the value members can derive from its clinical improvement services. Currently, VHA has more than 150 nurses, physicians and pharmacists on staff....

Finally, can you briefly describe how VHA differs from others in the market?
VHA is the only national alliance with a regional office structure. These 16 offices serves as hubs for the delivery of national VHA programs, but the offices also develop their own set of services and programs, which are tailored to meet specific demands of the members in each region. Half of VHA’s employees work in the regional offices, with some actually working onsite at large member organizations....