In January 2015, two North Carolina-based alliances – the Coastal Carolinas Health Alliance and the Southern Atlantic Healthcare Alliance – formed a joint venture to combine their purchasing power. As director of operations for Coastal Carolinas Health Alliance, Barb Biehner, FACHE, works with the operations team of Illucient Purchasing Alliance, LLC to find new contract opportunities for their collective members.
“As a joint venture, Illucient allows our two organizations to work closely to achieve stronger savings opportunities and cost reduction while remaining independent,” says Biehner. “Both CCHA and SAHA have separate boards of directors, and continue to provide additional value-added programs for our respective members.”
The board of managers for Illucient is made up of hospital members from both CCHA and SAHA as well as the CEOs from each alliance, she adds. The chair position rotates between the two CEOs.
Illucient represents 24 hospital systems with 44 total hospitals and 9,300 licensed beds. To date, Illucient has close to 150 contracts in 14 categories, such as finance, information technology, pharmacy, and materials management. The alliance saved its members $6.5 million in FY 2016, says Biehner.
“We really focus on what the GPOs don’t offer on a regional basis, or on smaller companies that might have unique products and services,” she says. “Since Illucient does not charge the vendors an administrative fee like the GPOs do, 100 percent of the negotiated savings goes right to our members.”
Examples of Illucient contracts include:
- Temperature systems for pharmacy, and smaller-niche pharmaceuticals.
- Utility Management Services, a local/regional service provider that performs audits on members’ utility accounts to look for better rates as well as billing errors.
- Confidential destruction of documents (with A Shred Ahead).
- Reference lab services (with LabCorp).
“We’re able to identify new contract opportunities based upon our members’ needs,” says Biehner. “Although they all participate in large national GPOs, such as Premier, there are still many services and products that are not on national contracts.”
In addition, Illucient has a relationship with Intalere.
To make an alliance such as Illucient work, communication is key, says Biehner. “Since CCHA and SAHA remain independent and separate entities through this joint venture, we quickly discovered that we needed a strong current of communication between the two teams. This has helped us avoid unnecessary duplication of work, keep up to date on new and ongoing negotiations, and identify key needs for our members.
“Another lesson we continue to work through is marketing contract opportunities to our members,” she says. “We learned that part of bringing savings and values to our members meant regular updates to them about what’s available in the Illucient portfolio. It’s crucial to update key groups or individuals at each hospital about those opportunities. We’ve even invited representatives from our business partners to attend team meetings for a presentation of their services.”
Though the future of healthcare delivery in the U.S. is anything but clear, Biehner believes Illucient will continue play an integral role for its members for years to come.
“Our member hospitals are quite diverse in terms of size, location (urban/rural) and the communities they serve,” she says. “That’s given Illucient a unique niche, because many of the smaller members may not have been able to secure the kinds of savings Illucient has without the additional purchasing power. The combined size is a key asset for our members. We also hope to expand that membership over the next five years by showcasing our current successes to new hospitals throughout the region.”
Coastal Carolinas Health Alliance, Wilmington, N.C.
Established in 1991 as a way to build stronger peer relationships among hospitals along the coast of North Carolina, Coastal Carolinas Health Alliance now serves a population of approximately 1 million people in North and South Carolina.
Southern Atlantic Healthcare Alliance, Cary, N.C.
The Southern Atlantic Healthcare Alliance was established in 2004 to nurture collaborative relationships among member hospitals in order to improve the quality of healthcare. The alliance provides networking and information dissemination, as well as educational opportunities and volume aggregation.