Net economic impact was the key factor that drove the Texas Purchasing Coalition to sign a multiyear agreement with MedAssets. Pricing was important, but so too were the resources – including people – MedAssets was willing to commit to help Coalition members drive down supply costs.
Texas Purchasing Coalition is a spin-off organization of the Healthcare Coalition of Texas, which provides a variety of services to community-based hospitals and healthcare systems across Texas, including education, quality improvement programs and contracting for purchased services. The decision to sign with MedAssets coincided with the termination on Dec. 31 of the licensing agreement between VHA Texas and Irving, Texas-based VHA Inc., an owner of Novation. VHA Texas elected to move forward under the name Healthcare Coalition of Texas.
Texas Purchasing Coalition is a regional purchasing group comprising 11 Texas-based healthcare systems. Combined, its members represent approximately $750 million in annual supply purchases. It was created in 2007 and since then has achieved savings exceeding $16 million. Over an eight-month period, it considered proposals from the five largest national GPOs, including Novation, says President Geoff Brenner. In the end, “economics and capabilities” drove the organization to MedAssets.
“Texas has one of the highest rates of uninsured in the nation,” says Brenner. “So from a purely cost-pressure standpoint, economics were going to be the leading factor in our decision. Close behind that was our confidence in a GPO’s ability to deliver on the economics. The coalition wanted the GPOs to make aggressive proposals, but we were acutely focused on whether they had the tools, systems and technology to get the Coalition from A to B, to help it make that quantum leap.” Based on contract prices, administrative fee shareback, resources, and the technology and processes to remove costs, MedAssets emerged as the leader, says Brenner.
Just as important as the numbers were the resources – in systems and in people – that MedAssets agreed to commit to the Coalition. “MedAssets committed to provide a significant number of dedicated resources that are focused entirely on the Texas Purchasing Coalition, impacting a number of areas. Physician-preference items is a big one.”
While switching GPOs is a significant decision for any healthcare provider or system, the MedAssets contract portfolio represented the least amount of change to existing Coalition contracts, according to Brenner. “There will be change no matter what, but MedAssets represented the ‘least change’ option.”
VHA Texas was somewhat of an anomaly in the VHA network in that it had a licensing agreement with VHA Inc. Most of VHA’s other 16 regional offices are wholly owned by VHA Inc. The regional offices serve as hubs for the delivery and development of VHA national and regional programs and services, and serve as a home base for VHA’s supply chain consultants.
The loss of VHA Texas was no doubt a blow to VHA, whose headquarters in Irving, Texas, is located about 25 miles southwest of those of Healthcare Coalition of Texas in Plano. “We will serve our Texas members from our headquarters in Irving,” says VHA spokesman Lynn Gentry. “The Irving team will continue to lead efforts to recruit new Texas members.”