When the WNC Health Network developed a regional purchasing coalition in 2000, its intention was clear: to support its members in delivering safe, cost-effective, high-quality health services. The Journal of Healthcare Contracting spoke with Tim Bugg, CMRP, vice president, member services, about the success of WNC Health Network over the last 12+ years.
The Journal of Healthcare Contracting: How has WNC Health Network grown since the inception of its purchasing program in 2000?
Tim Bugg: WNC Health Network’s group purchasing program began in 2000 with 16 hospitals in the counties of western North Carolina, with approximately $150 million in Premier spend and 2000 licensed beds. Today, the network has a membership of 47 health systems, with 93 hospitals in North Carolina, South Carolina, Virginia, Tennessee and Pennsylvania. It is approaching $2 billion in Premier spend, with 15,000 licensed beds. We are continually discussing membership with health systems and are very open to new members joining.
JHC: Have you found that the network’s group purchasing program is providing its members with more advantages than originally expected?
Bugg: The opportunities WNC Health Network provides today definitely are greater than in 2000. The volume aggregation opportunities and the network’s resource management program, which entail utilization, benchmarking and best practice initiatives, bring multiple savings opportunities in all areas of the supply chain.
JHC: How much savings did your network achieve in its first year, and how has that increased since?
Bugg: In 2001, [one year into the purchasing program], the savings was $905,465. The network has progressed upward in savings each year [since then]. Calendar year 2011 savings exceeded $23.7 million, while early projections for calendar year 2012 appear to be on target with 2011. The network will top $100 million in [total] savings since its inception.
JHC: Has being part of a regional purchasing network enabled your members to leverage their buying power? Would you say they have become better and smarter at this over time?
Bugg: Absolutely. The members have gained leverage from total volume, size and commitment. The network represents all sizes of hospitals and health systems, and prides itself on price parity on all contract opportunities presented to members.
JHC: Please explain the process whereby your supply chain executives meet and make their decisions.
Bugg: The network is a 501(c)(3) not-for-profit corporation, with eight full-time employees in the group-purchasing division. Several work groups work on a variety of cost savings initiatives. The work groups – which include materials management, materials management advisory group, pharmacy, laboratory, food, finance, value analysis and human resources – make the final decisions for all contract directives. The network provides the background information and makes recommendations to the groups.
JHC: How does the network co-exist with your GPO? For instance, does it only work off of GPO contracts?
Bugg: The network considers our partner GPO, Premier, vital in our ability to offer savings to our joint memberships. All of the network members are also members of Premier; thus, the Network works primarily within the Premier contract portfolio and the Premier programs. However, depending on the membership’s needs, the network also has some limited local contracts. Premier and the network share the same vision to help members reduce cost using a variety of joint methods and programs.
JHC: How do you ensure that the interests of each of your facilities are considered and that each facility’s needs are met?
Bugg: The network uses our workgroup meeting format for collaboration and decision-making. This format allows all members to have input in all contracting decisions. Regardless of member size, the network operates under the premise of one vote per member.