VHA division serves hospitals in Midwest looking to cut costs

Group purchasing giant VHA has created a new division serving hospitals specifically in the Midwest.

The VHA has created Mid-American Service Solutions, which is focused on Midwestern acute care facilities and has about 120 in its purchasing group altogether, the Topeka Capital-Journal reported.

The hospitals working with Mid-American spend about $4 billion a year on supplies, and about half of those purchases currently go through Mid-American. The use of its services save about 15 percent on the total costs, the Capital-Journal reported.

The first members include the Stormont-Vail HealthCare system in Topeka. SCL Health, once known as the Sisters of Charity of Leavenworth, also is contracting with Mid-American.

Mid-American has about 230 supply contracts in total for equipment as varied as gloves, syringes and medical devices. It also will offer an auction-like bidding service known as Aptitude.

A large number of hospitals are seeking out group purchasing arrangements to get a better handle on costs. In addition to providing purchasing discounts, group purchasing organizations can provide supply chain consulting, benchmarking, e-commerce solutions, patient safety initiatives, revenue management, and equipment maintenance and repair.

In a study released earlier this year, the Healthcare Supply Chain Association concluded that group purchasing organizations save the healthcare sector 18 percent on their total costs, or as much as $864 billion between 2013 and 2022. Hospitals spent about $268 billion on supplies in 2012.

However, the use of group purchasing organizations has come under criticism in some quarters. For example, medical manufacturing device lobbies have suggested that the organizations inflate the prices of their products, costing the healthcare sector as much as $38 billion a year in 2010. The VHA's member hospitals have pushed back strongly against that claim, saying that there is no basis in fact and that its existence actually saves the healthcare sector money.

To learn more:
- read the Topeka Capital-Journal article

Suggested Articles

Industry competition over who controls healthcare’s “front door” is pushing legacy organizations to adopt new ways of thinking about M&A.

Medicare Advantage beneficiaries spend nearly 40% less than regular Medicare beneficiaries on care, a UnitedHealth Group analysis found.

Midsize regional health plans in particular face aggressive competition from large national players.