Premier asks suppliers to keep costs down

While there's lots of ways to deal with the current financial crisis, there's nothing wrong with simply asking for help--particularly if people really, really want your business. One group taking this tack is the Premier healthcare alliance, which runs a healthcare purchasing network serving more than 2,000 U.S. hospitals and 53,000 other healthcare sites.

While most vendors expect to increase their prices from 3 percent to 40 percent, Premier just sent a letter to suppliers asking them to keep prices more or less level. The group is also asking suppliers to offer its members pay term flexibility and flexible payment alternatives. (One wonders if Premier is putting pressure on banks to offer broader and more flexible financing options, too.)

With the economy in the dumper, tax revenues are going down, and that means that healthcare providers are already expecting lower payments from state governments; combine that with potentially rising supply costs and the 2 percent profit margin that most hospitals have, and you've got a recipe for disaster.

Now, the billion-dollar question is whether vendors would rather offer bargain-basement prices or risk antagonizing Premier. Given the pressures they're under, it's possible troubled vendors won't make as many concessions as the purchasing alliance wants. I guess time will tell.

To learn more about Premier's letter to suppliers:
-read this Healthcare Finance News piece