10 biggest mistakes in contracting, 54 largest IDNs, 5 things to know about Providence-Ascension deal

Volume 7 | December 13, 2017

Insights-Trends-Opinions

Welcome to National Accounts Weekly!

This the only publication dedicated to inform suppliers to healthcare on the good, bad and ugly of the U.S. contracting arena! Read this issue to be in the know!

We cover everything you need to know about GPOs, IDNs and RPCs!

If this is your first issue check out all the back issues here!

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54 health systems with the most hospitals

Becker's published the top 54 Hospital Networks across the nation. I love lists like this. With the huge merger announcements this week, just look at how drastically this can change if Ascension and Providence merge, or Advocate and Aurora do.

While it is interesting to look at lists like this, it's hard for this to be actionable data for a National Accounts Executive. What is really important is how each IDN measures up in their geographical area.

There are 40 cities in the U.S. with more than 1 million people. Knowing who the top 3 IDN market share leaders in each market would be very valuable and actionable data, giving National Accounts Executives a true road map of opportunity.

Top 10 Systems by number of hospitals

1. HCA Healthcare (Nashville, Tenn.) — 174

2. U.S. Department of Veterans Affairs (Washington, D.C.) — 143

3. Community Health Systems (Franklin, Tenn.) — 119

4. Ascension Health (St. Louis) — 78

5. Tenet Healthcare (Dallas) — 59

6. LifePoint Health (Brentwood, Tenn.) — 45

7. Trinity Health (Livonia, Mich.) — 44

8. Prime Healthcare Services (Ontario, Calif.) — 42

9. Providence Health & Services (Renton, Wash.) — 41

10. Kaiser Permanente (Oakland, Calif.) — 39

Click here for full list

How much profit does a not-for profit hospital need to make?

This is a question I get all the time. Especially from suppliers that feel leveraged and commoditized. I think it is a fair question to a certain extent.

There have been many headlines in the news the last few weeks pointing to how well IDNs are performing. Geez, with the Dow sniffing 25,000, who isn't doing well?

Check out this report from Axios. They studied the top 84 systems that comprised $535b in revenue and found they averaged a 2.7% operating margin or $14b in earnings in aggregate.

It's interesting to see the AMA's response is that the IDNs are benefiting from good investments.

Click here for the whole article

5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger

During a quiet Sunday evening, a bombshell dropped in the healthcare contracting news arena. Two huge IDNs are in talks to merge.

It is ironic, because last Thursday I did a webinar in partnership with Definitive Healthcare titled “The impact of IDN and GPO consolidation on the healthcare industry.”

In this webinar, I discussed huge mergers like;

CVS buying Aetna for $69 billion
United Health’s Optum buying Devita, that serves 1.7 million patients through 300 clinics
Advocate and Aurora combing to make the 10^th largest IDN

When I presented these, I thought they were game changers. Then I saw the Ascension/Providence St. Joseph news!

The most common question I get from industry stakeholders is “How many IDNs will we have when this era of consolidation ends?” In fact, I posed that exact question to the readers of National Accounts Weekly in a recent survey. If you would like to participate in the survey, click here: http://bit.ly/2Auuzcg

I assembled the following list for all those National Accounts Executives that cover the any of the current Ascension, Providence St. Joseph facilities.

5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger:

By the numbers, this merger will result in 191 hospitals, $45 billion in revenue, and operate in 27 states
This would create the largest IDN in the United States.
This could be a watershed moment in the face off between providers and payers. The ultimate play in size versus size (payer vs. provider). Who will win? The price setter or the payment setter?
Ascension’s The Resource Group could become the nation’s 4^th largest GPO. If Providence St. Joseph moves a small amount of their purchases to The Resource Group, they will easily pass Intalere as the 4^th largest GPO by volume. Currently, The Resource Group manages $8 billion in spend for Ascension.
This huge deal may very well trigger more large mergers to chase much needed economies of scale in pursuit of tax savings as a result of possible tax reform. The proposed tax bill takes away the ability for non-for profits systems to access debt tax free, thus increasing their cost to borrow capital.

Top 10 mistakes in dealing with GPOs, IDNs, and RPCs

Healthcare Links is a best-in-class Corporate Accounts consulting firm run by partners Ken Murawski and Maria Hames.

Both veteran and neophyte National Accounts Executives have to check out their list of the 10 biggest mistakes made in the contracting arena.

Number 9 is my favorite! Always surprises me when people believe their pricing is a secret!

What do you think?

Click here for the full list....

IDN, GPO consolidation discussion now available on demand

Last week I joined Mark Haddad, VP of Marketing for Definitive Healthcare, to discuss this crazy era of consolidation. You can now listen to the discussion in its entirety at the below link...for free!

In this webinar I tried to answer the following;

Why is consolidation happening?
How many IDNs will we end up with when consolidation ends?
What will the Supply Chain Leader of the Future look like?
What are the unintended consequences of consolidation?
What are some tactics for communicating with the Big Buyer of Tomorrow.

Take a listen and let me know what you think!

Click here for entire webinar

Understanding how Blockchain could help the Healthcare Supply Chain

You can hardly go five minutes reading a newspaper, surfing the internet or watching the news without hearing about Bitcoin and Blockchain. But have you heard how Blockchain could help Healthcare Contracting?

Cardinal does a really nice job explaining how Blockchain might help us get to the panacea...the Smart Contract.

But first, what is Blockchain? " Blockchain is essentially a database, or ledger of information with shared copies at various locations on a network.... "Picture a spreadsheet that is duplicated thousands of times across a network of computers." When a change or update is made to any part of a file from any part of the network, that change is almost instantly validated, recorded and reconciled at every node, ensuring consistent information across all files. Rather than a single master copy, every copy on the network, if given permission, has the right to make changes."

So imagine a contract as a live document accessed by many (maybe millions) with every transaction in it documented and validated by all stakeholders. Gone are the days when the GPO has the original contract with others hoping they have on file the correct version. Think of real-time pricing, access and updates.

The full article and video by Deloitte is well worth your time.

Click to read the article

People on the move

Jeff Petry now Managing Director, Life Science & Health Care at Deloitte Consulting

Tom Emmerson is now V.P. Global Sales and Global World Wide Technology

ShaJuan White joins HealthTrust as Sr. Manager Implementations

Feel free to share!

Thanks for reading this issue of National Accounts Weekly! Let me know what you think!

You are now, in the know!

John Pritchard

News@NationalAccountsWeekly.com

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