Contracting News Summer 2004

Novation Signs Deal With Siemens for CT Scanners
The agreement, based on Novation’s competitive bid process and input from the Novation Diagnostic Imaging Council, extends through June 30, 2007. It includes Siemens’ Sensation 64, Emotion Duo, Sensation Cardiac 16, Emotion, Sensation 16, Smile, Sensation Open (20 slice), Sensation 10, Emotion 6, options and accessories, and point-of-sale service agreements. Novation is the supply company of VHA Inc. and HIPPI, of Irving, Texas, and UHC of Oakbrook, Ill.

McKesson Signs $150M Contract with Adventist Health
McKesson Medical-Surgical Inc., of Richmond, Va., signed a three-year distribution contract with Adventist Health System, of Winter Park, Fla. Under the agreement, McKesson will supply medical-surgical distribution services to 35 of 38 Adventist acute care facilities, representing 5,600 beds in eight states. In addition, McKesson will provide Adventist with its state-of-the-art information/data management system, OPTYX, along with other enhanced distribution and supply chain management services. In turn, McKesson will support Adventist’s delivery of patient care to more than 4 million patients annually. Together the organizations hope to achieve optimal supply chain efficiencies through a new information-driven supply chain model. McKesson Medical-Surgical is a subsidiary of McKesson Corporation of San Francisco, Calif.

BearingPoint Wins Johns Hopkins Contract
BearingPoint Inc., of McLean, Va., won a four-year contract with Baltimore’s Johns Hopkins University School of Medicine and Johns Hopkins Health System Corp to develop a business systems infrastructure for HopkinsOne, a joint effort to re-engineer the financial and adminstrative processes of the two organizations. Financial terms of the contract were not released. HopkinsOne will replace hundreds of disparate systems and selected business functions into a single, integrated Web-based system. BearingPoint is working with SAP and the HopkinsOne team to integrate and streamline many business functions, including purchasing, accounts payable, payroll grants management, general ledger, materials management, and human resources.

Bon Secours Expands ER
Bon Secours Hospital, of Grosse Point, Mich., opened an expanded emergency room with capacity for 32 patients. Each room has touch-screen monitoring that is tied into the central nurses’ station. A “fast track” area was added for patients with less critical illnesses and injuries. Some rooms are designed to treat obstetrics and gynecology; ear, nose, and throat; orthopedic; and mental health emergency patients. During the summer, work began on expanding the critical care unit located on the second floor above the emergency department. Square footage will be increased by 50 percent for a total of 13 beds arranged around a central nurses’ station. The CCU is expected to be complete in 2005. Individual gifts in honor or in memory of loved ones helped fund the emergency department.

LifePoint Hospitals and Province Healthcare Combine
LifePoint Hospitals Inc., of Brentwood, Tenn., signed a definitive agreement to acquire Province Healthcare, also of Brentwood, for $1.7 billion in cash, stock and debt assumption. The two companies will combine under a newly formed company of 50 hospitals with approximately 5,285 beds and revenues totaling about $1.7 billion for fiscal year 2003. Forty-seven of the 50 hospitals are located in non-urban communities where LifePoint Hospitals will be the only hospital. Each Province Healthcare stockholder will receive a per share consideration of $11.375 in cash and an exchange ratio between 0.3447 and 0.2917 shares of common stock of the new company. Boards of directors at both companies unanimously approved the transaction. The transaction is expected to be complete by the middle of 2005.

Bausch & Lomb Wins VA Contract
Bausch & Lomb, of San Dimas, Calif., was awarded a $2.3 million contract from the U.S. Department of Veterans Affairs. Bausch & Lomb will provide pharmaceuticals for the period of the contract, which runs July 15, 2004 through July 14, 2009.

Universal Health Moves Around CEOs
Universal Health Services of King of Prussia, Pa., reassigned two CEOs to better meet market expansion and increase service delivery. Moody Chisholm, CEO of Amarillo’s Northwest Texas Hospital was appointed regional director of four California hospitals: Inland Valley Regional Medical Center, Wildomar; Rancho Springs Medical Center, Murrieta; Corona Regional Medical Center Corona; and a new hospital under development in Temecula. Frank Lopez, CEO of St Mary’s Regional Medical Center, Enid, Okla., was appointed to succeed Chisholm at Northwest Texas Hospital.

Dell Provides Northwestern Memorial With Computers, Notebooks
Dell Computer Corp., of Round Rock, Texas, was selected to provide 1,300 Dell OptiPlex desktop computers and 450 Dell Latitude notebooks throughout Chicago’s Northwestern Memorial Hospital. The technology will be used in nursing stations, patient rooms and clinical conference rooms to manage and chart patient records, provide access to clinical applications and e-mail, and manage medical supplies. The project’s goal is to improve patient care, reduce medical errors and increase efficiency by recording key patient information bedside.

Kaiser to Spend $8.9B on 19 California Hospitals
Kaiser Permanente, of Oakland, Calif., plans to spend $8.9 billion to build 19 hospitals in California over the next decade and renovate existing ones. The facilities will have acuity-adaptable rooms, which keep a patient in the same room for all levels of care. Each room will have the capability to provide for a patient’s care from ICU to discharge. Patient rooms will be clustered around nurses’ stations, doing away with the centralized nurses’ station concept. Kaiser officials cite research that shows that by keeping a patient in the same room with the same team of nurses, medical errors and administrative costs are reduced while increasing patient satisfaction. Hospitals using the new room design will open in Antioch, Modesto and Orange County in 2007. No plans are in place to retrofit existing hospitals to the acuity-adaptable room concept. Nor will the new Kaiser hospital under construction in Santa Clara, expected to open in 2005, have the new concept. Approvals by the nurses union and the state are needed before Kaiser can implement the new delivery of care. No formal talks between the union and Kaiser have taken place. Kaiser does not expect any delays or problems with the two organizations.

Consorta Renews Medex’s Contract
Consorta Inc., of Schaumburg, Ill., renewed its contract with Medex Inc., of Carlsbad, Calif., for an additional three years. The contract will provide Consorta members with access to Medex’s critical care products, including PROTECTIV and ACUVANCE. Consorta’s membership includes over 500 acute-care facilities and more than 1,800 non-acute care sites. With the contract extension, Medex could see an estimated $15 million in annual sales. Medco Earns No. 1 Ranking Medco Health Solutions Inc., of Franklin Lakes, N.J., earned a first place ranking for overall member satisfaction, mail order satisfaction and online services, in the 2004 WilsonRx Pharmacy Benefit Satisfac-tion Report released by Wilson Health Information, an independent consumer research company. Medco has been ranked No. 1 for four consecutive years. Results were based on 17,792 written responses received to its survey sent to 29,000 U. S. households. Twenty-one pharmacy providers were evaluated. Medco has two fully automated pharmacies and dispensed 78 million mail order prescriptions in 2003, of which 14 million were filled by its online operation.

HPG Picks Hill-Rom as Top 10 Outstanding Supplier
HealthTrust Purchasing Group, of Brentwood, Tenn., named Hill-Rom Company Inc, of Batesville, Ind., as Top 10 Outstanding Supplier for outstanding service in day-to-day operational performance and customer service. The top 10 list was selected in consultation with materials managers at HPG facilities. In July 2004, Hill-Rom received its award at the HPG 2004 Materials Managers Conference and Vendor Affair in New Orleans. Over 1,600 healthcare professionals attended the event. Hill-Rom’s product list includes patient beds, stretchers, therapeutic surfaces and devices, work flow solutions, nurse communication systems, headwalls and facility assessments. More than 6,500 people work for the company worldwide. Ohio State Opens Ross Heart Hospital Ohio State University Medical Center, located in Columbus, opened its $83 million Ross Heart Hospital on August 15, 2004. Patient services will be phased in through September 2004. The new 100-bed facility is approximately 225,000 square feet and features a robotic-based supply delivery system to all five floors. The new facility includes: 20 exam rooms; six ORs with video-conferencing capabilities; six catheterization/intervention and electrophysiology labs; echocardiograph labs; two echo stress test suites; four noninvasive vascular labs; three nuclear stress labs; cardiovascular CT; cardiac MR; cardiac device implant lab; transesophageal echo lab; five physician consultation rooms; seven physician clinic offices; a meeting/boardroom; and a conference center with a 200-seat auditorium. A combination of OSU bond financing, hospital operating income and gifts will be used to fund the project. Ross is the third heart hospital in the Columbus area.

GNYHA to File Suit Against CMS
The Greater New York Hospital Association, located in New York, N.Y., plans to file suit against the Centers for Medicare and Medicaid Services in Washington, D.C., in the U.S. District Court in New York. The suit challenges the lawfulness of CMS’ plan to shift $930 million from New York hospitals to New Jersey hospitals over the next decade due to redrawn labor markets. CMS uses the labor markets to determine Medicare reimbursements for hospital labor costs. The redrawn markets shift three New Jersey counties to the New York area, which has higher reimbursements. The CMS plan goes into effect on October 1, 2004. GNYHA also plans to file an appeal with CMS’ provider reimbursement review board prior to October 1. CMS noted that wage areas are changed every 10 years to reflect new census data.

Vanguard May Buy Two Tenet Hospitals
Vanguard Health Systems, of Nashville, Tenn., may purchase Tenet Healthcare Corporation’s, of Santa Barbara, Calif., MetroWest Medical Center-Framingham Union Campus, of Framingham, Mass., and St. Vincent Hospital-Vernon Hill Campus, of Worcester, Mass. Tenet confirmed that it plans to sell the facilities, and Vanguard was named as the most likely buyer. Vanguard does not comment on potential purchases. In August 2004, private equity group Blackstone Group LP agreed to pay $1.75 billion for a majority share of Vanguard.

Sharp HealthCare Falls Below Nursing Ratios
According to the California Department of Health Services, Sharp HealthCare in San Diego, Calif., failed to comply with nurse-to-patient staffing ratios at three of its San Diego hospitals when nurses took breaks or had lunch. Complaints from the nurses union just prior to contract talks led to the surprise inspections at Sharp Memorial Hospital, Sharp Mesa Vista Hospital and Sharp Mary Birch Hospital for Women. The hospitals submitted a plan to address the staffing ratio problems, as required by the state. State officials found that Sharp Grossmont Hospital in San Diego met its nurse staffing requirements. In January 2004, the state began mandating nurse-to-patient ratios. Shortly after the inspections, Sharp signed a contract with the nurses union that includes staffing ratio requirements.

VHA Hospitals Reduce Cardiovascular Costs
VHA Inc, of Irving, Texas, helped nearly 400 member hospitals identify more than $120 million in potential savings in cardiovascular services. These services are one of the most costly services for hospitals to operate. VHA can help most members reduce costs by an average of 14 percent through better utilization of the supply contracts managed by VHA’s supply company, Novation of Irving, Texas. VHA helps members benchmark their overall supply costs for cardiovascular procedures against other members and available national data. A consulting team works to help hospitals improve how they use supplies to achieve even greater savings. Abington Memorial Hospital, in Abington, Pa., saved $2.4 million in less than three years as a result of the supply cost management program.

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