New Beginnings

Time Out
Mark McKenna is retiring from Novation after 18 years, but plans to remain engaged in the industry.

Mark McKenna’s professional life had a certain rhythm to it. He stayed in his first job for a year, his second job for two years, his third job three years, and so on, until he reached VHA Inc. in 1987. Then, his sense of timing left him; he hasn’t left the place since. But that’s about to change. McKenna at press time was preparing to step down as Novation’s president and CEO. (Novation is the contracting services company of VHA and the University HealthSystem Consortium.)

Born on Halloween in 1948, McKenna was raised in Concord, Mass., and graduated from Boston College with a degree in business administration. After a short stint in the National Guard, he got a job as an insurance claims adjuster, working primarily with property-owners whose property had sustained damage. He stayed a year, and then became a textbook salesman for Prentice-Hall. He stayed two years, and then got his first medical sales job, calling on Boston-area hospitals for Johnson & Johnson Patient Care Division (later, Johnson & Johnson Medical Inc.). He stayed three years.

From there, McKenna became a sales rep for American Hospital Supply Corp.’s McGaw IV division. Big changes were soon to follow. McKenna moved to McGaw’s corporate office in Newport Beach, Calif., where he became involved in product management.

After four years with American, McKenna left to join San Diego-based IMED Corp. (now ALARIS Medical Systems, part of Cardinal Health), a manufacturer of electronic flow control devices whose products were distributed by American. He was senior product manager, then marketing director, with responsibility for all product lines and clinical support services. After the company was purchased by Warner-Lambert (now Pfizer), McKenna decided to leave. He had two options: join a startup medical device company in Boston, or make a jump to the provider side and join VHA in the Dallas area. For personal reasons, he decided on the latter.

VHA Supply Company
In 1978, VHA Supply Company was in its infancy. Most of the people who worked there were from the provider side. McKenna was an exception. His mission was to manage the med/surg contracting business and to advance VHA’s private-label program, VHAPLUS (now NOVAPLUS).

VHA had commanded the attention of the industry one year earlier, when it signed a landmark price-cutting deal with Abbott Laboratories for IV solutions. “VHA was looking for 90 percent commitment in 90 days, and they were able to achieve it,” says McKenna. “Groups, which had been sporadically effective, now gained the attention of the supplier community. At the same time, they satisfied the need of the provider community to reduce costs.”

One of the keys to VHA’s early success lay in its genesis, McKenna explains. “It all started with a handful of CEOs who were very committed to doing things together.” Even after the Supply Company was formed, the CEOs remained engaged in the organization. “They played a leadership role.” And with that came commitment.

As McKenna worked with member advisory councils on the contracting side, interesting things started to happen. “We started looking at products that up to that point in time had not been contracted for by group purchasing. It was the very, very beginning of clinician-preference.” One of his first assignments was to pursue an agreement for transducers, something no other group had done. (VHA signed a contract with Abbott Laboratories.).

Formation of Novation
In 1997, McKenna was part of a team working to put together a joint venture purchasing program with University HealthSystem Consortium. Their efforts culminated in the formation of Novation in 1998.

“One of the biggest challenges was coming to closure on the fact that we could work well together,” he recalls. Then the task became “taking two large portfolios and finding a way to make one plus one equal three.” In other words, creating a Novation portfolio that would surpass in value those of its founding partners. Indeed, McKenna and others at Novation spent the next three years working on it.

Challenges of the recent past
More recently, purchasing groups have been challenged as never before, says McKenna. Novation is no exception. New contracting entities have entered the market, challenging the status quo. In addition, Congressional hearings on the potential anticompetitive nature of group purchasing turned the spotlight on what had been a little-noticed corner of the healthcare industry. “These converging events made us take a hard look at who we are and how we could do better,” he says.

“And it was probably overdue. Most industries are very competitive in the way they operate. We were pretty insular. We perhaps didn’t realize how big this industry had become. Once you reach this size, though, you’ll get somebody’s attention.”

Novation has emerged stronger than ever, says McKenna. “The last four years have actually improved what our members receive in value. They have helped us be better listeners and make sure that our programming is focused and integrated into the supply chain offerings of [VHA and UHC]. We are better at what we do, and we can actually measure that.”

As never before, Novation has learned how to target its services more sharply. “We have been able to individualize what we do for different member segments, whether they are academic medical centers, large integrated networks or rural hospitals,” he says. “We have organized our contracting [programs] by service lines, to mirror the providers we serve. And we have listened to our members’ needs. If they want to operate on a transactional basis, we have the core portfolio, and we’ll make sure they maximize their value from it. But if they want to operate more strategically, we can offer dedicated on-site resources, shared resources, etc. This is the only way we can operate in healthcare group purchasing.”

Chances are, the industry hasn’t heard the last of Mark McKenna. After taking a few months off, he intends to re-engage in the industry. “I haven’t figured out what that will be – perhaps working in an industry capacity that might promote the value of group purchasing.”

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