More than Scale
As we were working on the latest issue of The Journal of Healthcare Contracting, the news came down that VHA/UHC – now Vizient – was acquiring MedAssets.
When this deal closes, the new combined organization will be over $100 billion in contracted through-put – yet that scale is not the main driver of this acquisition. In this day of bigger is better and bigger gets you leverage, Vizient is absorbing MedAssets because it is actually chasing performance-enhancing opportunities for current and potential clients, not scale to leverage suppliers. As Jody Hatcher, VHA/UHC president, states: “It’s more associated with data, best practices, performance improvement. These are far more important than scale related to purchasing volume.”
It would be naïve to think that a contract re-fresh isn’t forthcoming, where Vizient as a result of their new scale will request better pricing, but I find it very refreshing to see the intent of the acquisition isn’t simply scale. You may think I write this with tongue in cheek, but I am not. I liken it to my call to Supply Chain Leaders to start looking for products and services that may actually cost more but affect how the hospital performs by increasing quality or enhancing patient experience. If it actually happens, we can hopefully start to transcend the transaction and see true partnerships form that are rewarded for performance with patient care in the center of the evaluation.
Hatcher continues with his explanation of the importance of cost and quality being part of the fabric of the combined organization, and his belief that it will be in a better position to move the needle for their customers. In fact, he is so confident that he believes it will make them an imperative partner for their clients. “The question is, do you as a provider have the systems, processes and capabilities to measure, manage and track how you’re performing in an alternative payment scheme?” he says. “Our view is, we should be an indispensable partner providing solutions to enable organizations to perform better.”
One way the purchasing group can be that partner is through data and analytics. Another is simply by bringing together provider members to share best practices.“We learn, improve and build together, and by doing that, we will accelerate [our members’] collective performance. Hospitals can’t operate in isolation anymore; we can be a catalyst.”
I couldn’t agree more, and I see it every day in our nation’s hospitals and IDNs. There seems to be a great desire to have performance tactics and processes home grown or at least germinate from within, whether its value analysis, contracting terms and conditions, how they deal with alternate payment models or aggregate purchased services. I just don’t think the variance found in the marketplace by providers working concurrently on these challenges will get them to where they need to be as fast as they need to be there. Time is of the essence. Vizient appears to be assembling an answer to this challenge!
John Pritchard
