Where payer, provider and supply chain intersect

Under the direction of William O’Connor, Provider Supply Chain Partners intends to bring integration to a new level

Provider Supply Chain Partners in Pittsburgh is positioning itself to be a full-service, outsourced supply chain company, offering group purchasing, distribution services, biomedical engineering and other supply chain services to providers throughout Western Pennsylvania. It’s a bold venture. But what differentiates it even more is the fact that it’s owned by an insurer – Highmark, an independent licensee of the Blue Cross and Blue Shield Association.

Highmark’s decision to launch a healthcare supply chain company followed its decision in 2011 to affiliate with West Penn Allegheny Health System, a five-hospital system in Pittsburgh. (The acquisition at press time was still pending.) Highmark intends to build an integrated healthcare delivery system servicing Western Pennsylvania. On March 1, the company finalized its affiliation plan with Jefferson Regional Medical Center in Pittsburgh, and it continues to pursue an affiliation with Saint Vincent Health System in Erie, Pa. Highmark is also pursuing plans to build a medical mall and other new and expanded facilities.

Payer to build integrated system
“The Provider Supply Chain Partners companies are a key component of Highmark’s integrated delivery system plan,” says William O’Connor, senior vice president, Provider Supply Chain Partners. They will “enable Highmark to employ group purchasing and supply chain management strategies and technologies to reduce costs, improve efficiencies and leverage the strengths of an aligned provider organization to achieve high quality care, improved health outcomes and affordability of health care for the community members served by the integrated delivery system.”

A native of the Pittsburgh area, O’Connor graduated with a degree in communications from Clarion University of Pennsylvania. He was a buyer at Montefiore Hospital in Pittsburgh, and in 1986 joined UPMC, now a large IDN in Pittsburgh. He stayed there until 2005, ultimately serving as its corporate director of supply chain. He joined Provider Supply Chain Partners (formerly called ProtoCo) in April 2012.
Provider Supply Chain Partners actually comprises three separate companies, which share resources and seamlessly service customers and conduct business with vendors, says O’Connor. They are: Provider PPI LLC, which focuses on group purchasing of pharmaceuticals and physician-preference items; Provider Supply Chain Services LLC, offering group purchasing and distribution of items other than pharmaceuticals and physician-preference items; and HMPG Pharmacy, set up to provide pharmacy distribution services.

The vision statement of Provider Supply Chain Partners is to:

• Establish evidence-based protocols derived from best practices and clinical outcomes.
• Ensure physician, clinician and stakeholder participation and accountability in supply chain decision-making.
• Drive value while improving quality, outcomes, service, safety and satisfaction.
• Deliver a portfolio of contracts with high-quality products and service at a cost that satisfies its clients’ needs and desires.
• Partner with a network of clients and suppliers to create and sustain mutual, enduring value.

Home-grown solution
Why did Highmark elect to launch its own supply chain company rather than sign on with an existing GPO or alliance? “We believe that as a regional GPO and supply chain company, we can drive better compliance with purchasing obligations, resulting in better pricing for our hospital clients,” says O’Connor. In addition to those facilities and IDNs which Highmark is acquiring or with which it is affiliating, Provider Supply Chain Partners has signed contracts to provide services to West Virginia United Health System, Fairmont, W.V.; and Titusville Area Hospital, Titusville, Pa. The company is close to signing additional hospitals, and is currently working with approximately 250 physician offices.

“Unlike national GPOs, Provider Supply Chain Partners is partnering with clinicians on key decisions,” says O’Connor. “For example, the clinicians help determine procurement and protocols related to medical items. That activity will be tracked, and compliance will be monitored in a way that will lead to a consistently high standard of care for patients, while assuring good business practices.” During its start-up phase, Provider Supply Chain Partners is contracting with Premier to supplement its direct contracts with vendors, he says.
Provider Supply Chain Partners intends to distribute pharmaceuticals and med/surg supplies to its customers from a warehouse in the Pittsburgh area. At press time, the company had signed a lease for a facility, with construction scheduled to begin soon.

Provider Supply Chain Partners’ goals for 2013 are simple: increase membership, decrease vendor pricing and open its distribution center.