Group Purchasing Discussion

Group Purchasing Discussion

Group Purchasing Discussion Agenda Topic to be covered are: Examine best price capabilities of a GPO Roster Management, Membership Responsibilities and Eligibility Overview of Vizient Questions and Answers 2

Pharmacy Best Practice Capabilities of a Group Purchasing Organization Maximizing and Leveraging Buying Power Analyzing and Understanding Spend Patterns Formulary Control Evidence Based Clinical Decision Making Operational Efficiency Revenue Recognition and Understanding Solutions Through Collaboration 3 Vizient Presentation February 2017 Confidential Information

Group Purchasing Organization Funding GPOs are funded by one of two mechanisms: 1) Hospital pays Membership Fee to belong to the GPO and to access the contracts that the GPO offers. 2) Manufacturer or supplier pays administrative fees to the GPO typically ranging from 1%-3% price of the product. Administrative Fees: Social Security Act amended in 1986 allows GPOs to collect administrative fees from those suppliers with which the GPO has developed a contractual relationship and are not considered kickbacks 1) Administrative Fees must be disclosed in an agreement between the GPO and the participating member 2) The agreement must state that the fees are 3% or less of the purchase price of the product (if the fees are higher, the amount each vendor will pay must be disclosed in writing at least annually along with the amount received by each vendor from the purchases made from the member.) 4

Group Purchasing Organization Contract Types GPOs encounter a variety of contract types within the pharmaceutical industry: 1) Base Contract 2) Base Contract with Rebate (rebates may be paid either quarterly, semiannually or annually) 3) Bundled Contract (contracts for multiple products produced by a single manufacturer) 4) Performance Contract based on market share, total units purchased, or total dollars purchased with or without a rebate GPOs contract for other types of goods and services used in hospital pharmacy departments: Agreements with pharmaceutical distributors Reverse Distribution Agreements Specialty Distributors Technology and Equipment (eg IV Hoods, ADMs, robotics, carousels) 5

Group Purchasing Organization Roster and Membership The eligibility for participation within a GPO is determined by that Group Purchasing Organization and the GPO maintains an active roster of membership. Many performance programs have letters of commitment (LOCs) that the pharmaceutical supplier requires the provider to sign to access the program. These LOCs may be managed by the GPO, to track membership enrollment in the program Many GPO agreements require that the GPO manage any performance-based agreement in which an LOC is required so that the GPO can assist members in determining if they are receiving the correct pricing based on their tier assignment and also to notify the member when they are close to meeting the next tier (better pricing) 6

This is the new Vizient Country's largest health care performance improvement company Combination of VHA, University HealthSystem Consortium, Novation, MedAssets Spend and Clinical Resource Management and Sg2 Experts with insights and connections and purchasing power that accelerate performance for members 7

Purpose, mission, strategic aspirations Purpose To ensure our members deliver exceptional, cost-effective care Mission To connect members with the knowledge, solutions and expertise that accelerate performance Strategic Aspirations Become an indispensable partner to health care organizations Become a leader in health care innovation Accelerate our growth rate 8

Member-driven We measure our success by our members success. We fuel powerful connections that help members focus on what they do best: deliver exceptional, cost-effective care. MEMBERSHIP BENEFITS Harness powerful insights Accelerate performance Achieve scale and efficiency Make innovative connections Be more agile Build knowledge Gain advocates on important policy issues 9

Vizient leverages four key capabilities to deliver on member needs Sourcing services Analytic services Advisory services Collaboration services Elevate members supply performance by leveraging scale, workflow automation and expertise Broader, more competitive contract portfolio Data-driven contracting decisions Offerings that support the industry s most diverse membership and customers Be members trusted source for clinical, safety, supply, financial and operational decision-making across the care continuum Comprehensive insights identify opportunities to improve: Cost savings Operational efficiencies Clinical outcomes Overall performance Accelerate improvement in member performance through the transfer of knowledge and expertise Unparalleled insights to improve the pace and effectiveness of valuebased care Expanded breadth of advisory services Physician strategies Clinical redesign Connect members to enable learning, improving and building together Empowering members to improve faster than they could on their own Advancing visionary innovation to meet the evolving needs of providers Workforce solutions Non-labor strategies 10

Vizient s Overall Pharmacy Solutions GPO Rx Program Member Support Pharmacy Needs Optimal drug spend Clinical integration Evolution of pharmacy practice System-wide integration Learn Networks Collaboratives Analytics Consulting Clinical Resources 11

Vizient s GPO Pharmacy Program Extensive portfolio offers the best economic value, product availability, clinical support and sophisticated analytics to optimize performance $48B in annual committed purchasing volume >12,000 contracted products and services $1.6B in annual NOVAPLUS Pharmacy volume Best financial value in the industry and a proven strategy to protect our members against drug shortages Pharmacy Clinical Center of Excellence The industry leading pharmacy clinician team with expertise in clinical practices (e.g. Biosimilars, Oncology & Antimicrobial Stewardship) Solely dedicated to ensure our members are delivering top of class clinical care to their patients Unparalleled contract and clinical analytics suite and audit service GPO Pharmacist resource Dedicated pharmacist assigned to the account to maximize the value through analytics and best practices 12

Q and A