2011 HPS Annual Report by angela jones

2011 ANNUAL REPORT

T N I G O SSI N

S...TH E H P S JO U R NE Y E I R O T I R R E T O NEW

Letter from the Board Chairperson and President/CEO | Page 1 Welcome to the HPS Community | Page 2-3 Distinguished Departments | Page 4-11 Contracts Member Development Furniture, Finishes and Equipment Design Center Corporate Communications Behind the Scenes | Page 12-17 Industry Partners Board of Managers Advisory Committees HPS Staff

DEAR HPS MEMBERS/PARTICIPANTS

Fiscal year 2011 marked the beginning of a new journey for HPS. HPS went through a changing of the guard when President and CEO Jerry Welsh retired and Tom La Pres took the driver’s seat as our new president and CEO. With a clear vision in mind, we will continue to expand into new territories, increase our membership and provide exceptional member services. Our future is bright and will be filled with new challenges and excitement. HPS was presented in fiscal year 2011 with many successes and growth challenges which were met head on allowing us to focus on the same goal: enhancing our programs for our members. This year marked the highest membership return on investment we have seen, with members’ rebates increasing by 20 percent over the previous year. These rebates exceeded what members pay in dues to be a part of the HPS program by over 300 percent. MedAssets, our national partner, completed their acquisition of Broadlane, which established them as one of the nation’s largest GPOs. The combination of these companies resulted in a leading edge revenue enhancement partner for our health care members. With our MedAssets affiliation, HPS members can benefit from some of the best contract pricing in the industry, with highly complementary technology and clinical consulting knowledge. Our business strategies strengthen our commitment to provide our members value. We have focused on our marketing efforts which have led us to an entirely new image. Our rebranding approaches have given us the marketing edge we need to fulfill our duties as an extension of your business. With a new user-friendly website, professional marketing material and staff equipped with the industry knowledge, we are confident our mission of saving members money will grow even stronger. As we put another year behind us, our future journey follows the same path, to continue to enhance our services for our membership, as we strive to grow in new markets. With teams of dedicated board members, committees, and staff we will continue down the path to success by exploring new ways to service our members through hard work, dedication, and partnerships. We are proud to assist you in all of your purchasing needs and look forward to the opportunity to do so in the years to come. Sincerely,

Thomas J. La Pres HPS President and CEO

Nicholas E. Ceglarek Chairperson, HPS Board of Managers

YOUR JOURNEY BEGINS WITH HPS In the group purchasing community, HPS is your trusted business partner. As a member driven GPO, HPS has a reputation in the industry of honesty, expertise and customer service. Using the combined purchasing power of our membership, HPS is proud to offer you an abundance of contracts with competitive pricing as well as extensive partnerships with manufacturers for all of your finishes and furnishes. With dedicated designers on staff, we also have the expertise to assist you in any renovation or upcoming design project. As an HPS member, you receive service the HPS way. We establish a rapport and get in touch with you and all of your purchasing requirements. By servicing the needs of our health care members, we continue to uphold the building blocks of our company in the health care dedicated field. Our local roots extend to our national partner, MedAssets. MedAssets further enables our customers to deliver high quality, affordable health care by offering supply chain management and a comprehensive suite of technologies and services.

By spreading our wings and our offerings to non-health care facilities, our membership solidifies a diverse base with a variety of programs for all of our affiliations. With our increasing purchase volume and forward thinking staff, HPS is poised to remain a leader in the industry. Our goal is to provide all of our member industries with the tools they need to utilize their HPS membership to the fullest and maintain a healthy bottom line. We are proud to be taking steps forward and crossing into new territories while maintaining the level of customer service in our established ones. With access to our contract portfolio and all of our exclusive programs, you can get the maximum value for your membership investment.

Non-health care Members/Participants by state AZ=23

“Don’t know where to order something? Call HPS! Each time I call them they send me the contract for the product or give me suggestions where I can buy something. The definition of HPS should be an extension of your purchasing department.”

WI=8 PA=61 OH=251 MI=950

—Joanne Bruxvoort, Retirement Living

KY=52 IN=214 IL=101 FL=28 Other=17

health care Members/Participants by state KY=8 MD=9 FL=13 WI=15 PA=21 Other=23 IL=26 OH=155 IN=231 MI=743

“It’s budget time and I needed approximate numbers for my capital projects. I called HPS and they were able to complete the budget with the projected costs. Thanks for your help on this project and hopefully I’ll be ordering soon!”

—Nora Callahan, Goodwill Industries Suncoast

Contracts

• In 2011, MedAssets completed its acquisition of The Broadlane Group. The combination of MedAssets and Broadlane creates the industry's leading end-to-end financial improvement partner that has saved billions for its health care members. HPS is excited to be able to offer this enhanced portfolio and benefits to our membership. • The senior living classification total contract volume for fiscal year 2011 increased 11.23 percent over 2010. HPS’ contract portfolio inherited an additional medical surgical distributor which will now allow distribution to fully align with our entire member footprint. • The HPS regional and national rebates given back to our membership increased 19.8 percent from 2010. This number reflects highly of our business relationship and our commitment to ensure our members receive the most out of their HPS membership. By being committed to our programs, HPS members will no doubt see the benefits in reimbursements.

CONTRACT UTILIZATION BY SEGMENT

Medical 25.02%

Medical Associates 8.27%

Associates 9.99% Senior Living 24.78%

Education 31.94%

“The HPS contracting department is continuing to work diligently to develop competitive contracts for all of our members. With the help of our advisory committees, made up of our members, the contracting team can make the best executive decisions to ensure positive growth as we continue to gain headway with our contract usage.” —Kevin Crampton, VP of Contracting and New Business Development

• With HPS education classification’s contract volume exceeding last year’s numbers by 3.91 percent, HPS entered into its 9th state to bring value to our member districts. Commodities continue to be a focal point to this classification. New to the contract offering is “Commodity Volume Rebates.” These rebates will bring additional value to those members that utilize the HPS program for their commodity needs. • In 2011 the HPS associates classification utilization of HPS contracts increased 3.8 percent over the usage from 2010. This is a great indication that more of our members are using the HPS contracts! • The HPS regional contract portfolio represents a 10.22 percent increase over fiscal year 2010. There were a total of 51 contracts that went out to request for proposal, eight of which are brand new to HPS.

10,000,000

8,000,000

6,000,000

“This past year has proven the value proposition that HPS brings to our mutual customers. Beyond the value negotiated on a member’s invoice, both HPS and GFS strive to make the food service distribution contracts a complete package. Ongoing vendor negotiations, successful and accurate audit results and the largest payout of member rebates made for a strong year for HPS and GFS’ Non Commercial Sales Team.” —Matt Schichtel National Accounts Healthcare Manager, Gordon Food Service

4,000,000

2,000,000

2006

2007

2008

2009

2010

2011

REGIONAL REBATES BY YEAR

2,000,000 “MedAssets and HPS have had a very successful partnership for over eight years. As health care continues to evolve and transform, MedAssets and HPS are working together to provide members access to a competitive national portfolio. Because of HPS’ long standing commitment to aid MedAssets in the fight against rising health care costs, they received our 2009 Partnership Achievement Award at our annual Healthcare Business Summit. We look forward to our continued relationship with HPS.”

1,500,000

1,000,000

—Rand Ballard Senior Executive Vice President, Chief Operating Officer and Chief Customer Officer, MedAssets

500,000

2006

2007

2008

2009

2010

NATIONAL REBATES BY YEAR

Member Development “The HPS member development team is consistently entering into new markets and gaining momentum within our current markets. By making ourselves readily available to our members and potential members, we continue to bring numerous programs and services to the forefront. This is our promise to fulfill our goals in enhancing your opportunities as an HPS member.” —Michelle Pleiness, VP of Member Development and Customer Relations

State Total Arizona................................................. 23 Florida................................................... 41 Illinois..................................................... 127 Indiana................................................. 445 Kentucky.............................................. 60 Louisiana.............................................. 1 Maryland.............................................. 9 Massachusetts..................................... 1 Michigan.............................................. 1,693 Mississippi.............................................. 1 Missouri................................................. 7 North Carolina..................................... 7 Ohio...................................................... 406 Pennsylvania........................................ 82 Tennessee............................................ 6 Virginia.................................................. 4 West Virginia........................................ 4 Wisconsin.............................................. 23

Grand Total............................. 2,940 “I’ve been a member of HPS for over 10 years. Year after year we receive rebates from our participation in their program that are much more than we pay in membership dues. Keep in mind the rebates are in addition to the savings on every invoice. Thank you HPS for your assistance in doing my job every day and most of all for making it rewarding!”

—Jean Kish, Goodrich Area Schools

• The majority of the health care membership segment in fiscal year 2011 committed to participate with the MedAssets contract portfolio for the next three years. The MedAssets/Broadlane acquisition has proven savings for members and our existing business continues to grow. • In fiscal year 2011, the markets of Wisconsin, Illinois, Florida and Michigan grew in the senior living segment while the member development team continues to build relationships. During this time of funding cuts, HPS continues to collaborate with our members to access programs to reduce their facility’s cost of doing business. • Every state in the HPS footprint grew in the education segment; Michigan, Ohio, Indiana, Illinois, Florida, Wisconsin, and Kentucky. The membership team focused on contract compliance in 2011 to assist our education members on understanding the best items to purchase on contract. • Senior meals programs, county government, and your local camps make every community complete. At HPS, our associate membership completes who we are. Year after year, local community organizations become part of the HPS membership as they did in 2011. • As HPS approaches over 3,000 members, the member development team continues to maintain the goal of 100 percent of our membership contacted. Therefore, we hold ourselves accountable to either a region manager visiting your facility or a member resource representative calling you to go through your business review each year.

Furniture, Finishes and Equipment

• The HPS membership took advantage of the Furniture, Finishes and Equipment program, increasing the usage 5.2 percent from last year’s sales. • With extensive marketing changes, the impact to educate our members on the benefits of the FFE program became a focal point in fiscal year 2011. By giving the program its own identity and image, the FFE program gained momentum in servicing our members. Adding a specific webpage to our website gave the program the exposure it needed to remind members of its offerings. The FFE program also created its own marketing pieces to ensure members get specific details on all the highlights and benefits. • In addition to new marketing efforts, new enhancements led to an increase in savings. Members who utilized the quarterly food service equipment savings flier saved an average of 13 percent more from the HPS every day savings. This quarterly flier is mailed out monthly, to ensure members receive the information on a regular basis.

• The HPS FFE program values its relationship with Great Lakes Hotel Supply. This partnership continues to grow business in the food service equipment sales and design. Our relationship with Brad Heuton, Account Representative, and his assistance in designing, equipping and updating commercial kitchens, has led to an increase in our revenue to meet an all-time high in dietary sales.

FURNITURE, FINISHES AND EQUIPMENT PURCHASES BY SEGMENT

• HPS continues to maintain excellent customer service. Our attentiveness to your needs and our personal dedication has led us in the right direction in continuing to be an extension of your purchasing department and of your business.

MedAssociate=3% Medical=11% Associates=13% Senior Living=21% Education=50%

“At HPS we strive to keep customer service on the forefront. This always sets us apart from our competition as we deal with our members and their needs on an individual basis. Dedication and commitment has led to our success.” —Tom La Pres, President/CEO

Design Center

• HPS Design Center worked on 27 projects in fiscal year 2011 which generated 10 percent of the HPS Furniture, Finishes and Equipment sales. Customized items, such as casework, countertops, window treatments, and bedspreads were a large portion of that, averaging about 45 percent of the design furniture, finishes & equipment sales. The ability to customize greatly improves the aesthetics and function of a space.

• Fiscal year 2011 marked a 35 percent increase in design usage in the education market. This increase is due to our members taking advantage of our partnerships for food service design, as well as purchasing large quantities of furniture though the Furniture, Finishes and Equipment program. • HPS Design Center has partnered with Retirement Living Companies for over 10 years on numerous senior living facilities located in 11 locations throughout Michigan. Their return business reflects the service that is paramount for our members. • The HPS Design Center employs qualified designers that use the most current design techniques and understand the latest trends and design concepts. Currently, the HPS designers are focusing on various innovative design solutions to meet the needs of each member segment. Some of the completed projects this year include the addition and renovation of Lapeer County Medical Care Facility, the Huron County Medical Care Facility special needs unit, Edgewater Systems for Balanced Living and Greencroft Goshen Senior Center.

DESIGN BILLINGS BY SEGMENT “HPS was so responsive, from the first phone call and visit to the final order. The HPS interior designer was so knowledgeable and helpful but never pushy with her own opinions. Their prompt help made our design decisions so much easier.” MedAssociates=1% Medical=9%

Education=37% Senior Living=53%

—Amy Schini, Greencroft Goshen

Corporate Communications • HPS went through an entire rebranding campaign from the inside out. The corporate communications team worked with an outside marketing company and created a new design to reflect the friendly next door neighbor company that we are. The new branding efforts were put into place beginning with new marketing material showcasing the entire program as well as specific marketing material for our furniture, finishes and equipment and design programs. • In addition to marketing material, the corporate communications department designed a user-friendly website with our members in mind. The exclusive member-specific website was created with the flexibility to promote the industry news, contracts and promotions relative to each member. The new website offers a detailed search mechanism allowing members to search the entire HPS program at their fingertips. This allows for our members to receive the most up-to-date information with a click of a button. • The HPS Bottom Line and both health care and non-health care Serving Line newsletters have transitioned into a bi-monthly publication. These newsletters have transformed to include member updates, contract highlights, manufacturer promotions as well as HPS happenings. Our newsletters serve the purpose to not only inform, but to educate our members on our offerings.

• In addition to the bi-monthly newsletters, HPS has released a bi-monthly Headline Facts flier. This flier is an at-a-glance flier with important information regarding contracts decisions, MedAssets updates and industry news. You can also view all contract updates on the website at any time. • The 30th HPS Conference and Trade Show was a huge success. The conference offered multiple changes, including a new interactive exhibit hall and a networking luncheon. The trade show served its purpose to bring members together to educate themselves on the entire HPS program. With our member-vendor face-to-face time, educational opportunities and a showstopping presentation from keynote speaker, Eric Wahl, members were able to network as well as enjoy an entertaining day.

PHILANTHROPY HPS is active in our local community, giving support to a variety of organizations including: • • • • • • • •

Barry County Commission on Aging Barry County Relay for Life Barry County United Way Green Gables Haven Michigan Harvest Gathering Toys for Tots Woody Wyngarden Annual Scholarship Plus various holiday projects

In fiscal year 2011, the HPS family donated over $10,000 in addition to their time and service to these organizations and the local community. HPS is proud to be active in our community. This is an example of how we value our relationships not only in a business environment but in our neighborhood.

INDUSTRY PARTNERS HEALTH INDUSTRY GROUP PURCHASING ASSOCIATION We are a participating member of the Health Industry Group Purchasing Association (HIGPA), a trade association that represents group purchasing organizations (GPOs) and their trading partners.

HEALTHCARE GROUP PURCHASING INDUSTRY INITIATIVE HPS is also a participating member of the Healthcare Group Purchasing Industry Initiative (HGPII). This organization was established by major health care GPOs who adopt and practice a strict set of business ethics and principles. Members of HGPII maintain their responsibilities to the public and to government entities which fund health care services in the United States.

ALLIANCE FOR A HEALTHIER GENERATION HPS is collaborating with the Alliance for a Healthier Generation, founded by the American Heart Association and the William J. Clinton Foundation, to improve the nutritional quality of food and beverages served in schools across the country. Our two organizations have teamed up to make it easier for school districts to purchase healthier products at affordable prices.

HPS Board of Managers Nick Ceglarek, Chairperson Superintendent Hudsonville Public Schools Hudsonville, Michigan

Joanne Hawkins Director of Materials Management Charlevoix Area Hospital Charlevoix, Michigan

Matt Thompson, Chairperson-Elect COO Carson City Hospital Carson City, Michigan

Gary Henriksen CFO and Senior Vice President Michigan Health and Hospital Association Lansing, Michigan

Joseph Schodde, Treasurer CFO Charlevoix Area Hospital Charlevoix, Michigan

Howard Hyde Superintendent Evart Public Schools Evart, Michigan

Kevin Cawley President/CEO Sheridan Community Hospital Sheridan, Michigan

Timothy Johnson President/CEO Eaton Rapids Medical Center Eaton Rapids, Michigan

Gary Easton Administrator Lapeer County Medical Care Facility Lapeer, Michigan

Keith Miller Administrator Huron County Medical Care Facility Bad Axe, Michigan

Jeff Engelsman CFO Healthsource Saginaw Saginaw, Michigan

George Montgomery President/CEO Schoolcraft Memorial Hospital Manistique, Michigan

Dwight Gascho President/CEO Scheurer Hospital Pigeon, Michigan

HPS Advisory Committees Engineers Advisory Committee Robert Wakeman, Chairperson Allegan County, Allegan, Mich. Ed Pieksma, Vice Chairperson Dwelling Place, Grand Rapids, Mich.

Esther Townsend Hurley Medical Center, Flint, Mich. Bill VanSkiver Spectrum Health Medical Group, Grand Rapids, Mich.

Glen Barr Cass County Council on Aging, Cassopolis, Mich. Sandy Bowen Pennock Health Services, Hastings, Mich.

Kevin L. Beaver Rapid River Public Schools, Rapid River, Mich.

Bob Williams University of Detroit Jesuit High School & Academy, Redford, Mich.

Lucy Funk Wernle Youth & Family Treatment Center, Richmond, Ind.

Jon W. Carr Fennville Public Schools, Fennville, Mich.

Educational Purchasing Advisory Committee

Kelly Malmo MidMichigan Medical Center, Midland, Mich.

Sue Dennis Porter Hills Retirement Community, Grand Rapids, Mich.

Sister Bernadette Marie Jimkoski, CSSF, Chairperson Ladywood High School, Livonia, Mich.

Mike Marlowe Sunset Manor, Jenison, Mich.

Timothy Jaster Caro Community Hospital, Caro, Mich.

Karen Blais Michigan Family Resources, Walker, Mich.

Lucas McFarland Grand Rapids Home for Veterans, Grand Rapids, Mich.

Doug Powell Shiawassee County, Corunna, Mich.

Greg Pincumbe Highfields Inc., Onondaga, Mich.

Amy Mueller Dayspring Inc., Muskegon, Mich.

Desiree T. Quinney Michigan State University, East Lansing, Mich.

Mary M. Scobey Kalkaska Public Schools, Kalkaska, Mich.

Lee Willhite Culver Academies, Culver, Ind.

Randy Reynolds Swiss Village Inc., Berne, Ind.

Darryl Sydloski Maple Valley Schools, Vermontville, Mich.

School Food Purchasing Advisory Committee

Tim Schnipke Putnam Co. Sherrifs Office, Ottawa, Ohio

Barbara Webb Delta College, University Center, Mich.

Jeff Smithingell Shiawassee County Medical Care Facility, Corunna, Mich.

Food Service Administrators Advisory Committee

Susan Meyer, Chairperson Byron Center Public Schools, Byron Center, Mich.

Jennifer Starks Covenant House, Detroit, Mich.

Machelle Soper, CDM, BS, Chairperson Shiawassee County Medical Care Facility, Corunna, Mich.

Karen Bissett Oxford Area Community Schools, Oxford, Mich.

Michael Strimback Pennock Health Services, Hastings, Mich.

Richard J. Seewald, Vice Chairperson Adams Memorial Hospital, Decatur, Ind.

Gib Brown Camp CoBeAc, Prudenville, Mich.

Liz Bakunovich Edibles Rex School Program, Detroit, Mich.

Pamela Casey New Albany-Floyd County Cons. School Corp., New Albany, Ind.

Rick Eggers Eaton Rapids Medical Center, Eaton Rapids, Mich.

Connie Frakie Allendale Public Schools, Allendale, Mich.

John Gage Clark Retirement Community, Grand Rapids, Mich.

Jean Kish Goodrich Area Schools, Goodrich, Mich. Tim Kleaveland Sparta Area Schools, Sparta, Mich. Bernie Lane Holland Public Schools, Holland, Mich. Pat McGee Fruitport Community Schools, Fruitport, Mich. Jason Roller Shaker Heights High Schools, Shaker Heights, Ohio Mo Shamali Kentwood Public Schools, Kentwood, Mich. Bruce Spychalski Pellston Public Schools, Pellston, Mich. Diann Tosh South Haven Public Schools, South Haven, Mich.

Technical Advisory Committee Joanne Hawkins, Chairperson Charlevoix Area Hospital, Charlevoix, Mich. Cathy MacShara, Vice Chairperson Garden City Hospital, Garden City, Mich. Karen Anklam Scheurer Hospital, Pigeon, Mich.

Kevin Kennedy Pulaski Memorial Hospital, Winimac, Ind. Mary Ann Maier Pennock Health Services, Hastings, Mich. Nancy Nowiski Huron County Medical Care Facility, Bad Axe, Mich. Merton Spencer Arbor Hospice, Inc., Ann Arbor, Mich. Carol Vincent Adams Memorial Hospital, Decatur, Ind. Richard White Michigan Surgical Center, East Lansing, Mich. Al Wleklinski Dekalb Memorial Hospital, Auburn, Ind.

Current HPS Staff Tom La Pres President and CEO

Administrative Services Rick M. Jones Sr. Director of Finance and Administration Sharon Demond Accounting Assistant Brian C. McKinley Corporate Information System Associate Kendra Tossava Account Analyst

Contracts Kevin Crampton Vice President of Contracting and New Business Development Teresa Allen Contract/Data Associate Kandy Barnum Contract/Data Associate James Dobberstein Contract Portfolio Analyst Katie Hayward Contract Portfolio Analyst Corporate Communications Angie Jones Corporate Communications Associate Rachel Walkowiak Corporate Communications Associate

Design Center Caroline Croly-Griffiths Interior Design Supervisor Laura Purdy Interior Designer Furniture, Finishes, and Equipment Anna Hutchinson Customer Service Representative Tracy Keeler Customer Service Representative Janet Nicholson Customer Service Representative Robin Tagg Customer Service/Interior Design Assistant Tammy Wilcox Customer Service Representative Member Development Michelle Pleiness Vice President of Member Development and Customer Relations Brian Frank Director of Member Development Patty Stephenson Director of Member Development Lisa Stewart Director of Member Development Vern Barker Implementation Manager

Preston Fouts Region Manager Jackie Hepler Region Manager Tori Mascho Member Resource Representative Emley Navarro Region Manager Brian Smith Region Manager Jennifer Zech Member Resource Representative Steve Zikeli Region Manager Support Services Christine Clawson Administrative Clerk Amy McKinley Administrative Assistant Interior Design/Support Services Pam Patten Administrative Assistant Interior Design/Support Services

LONG TIME HPS EMPLOYEES HANG UP THEIR HATS Fiscal year 2011 marked a year of retirements upon the HPS staff. Jan Tossava, director contracts/national accounts, Paul Richardson, Ohio region manager and Jerry Welsh, president and CEO all bid farewell to HPS as they crossed over into their own new territories: Retirement. Jan Tossava spent a lifetime at HPS, retiring after 31 years of service. Her dedication and longevity to HPS did not go unnoticed, as she was a part of many of our companyâ&#x20AC;&#x2122;s trials and triumphs throughout its history. Jan went into retirement with plans of travel, volunteering and spending time with her family. Paul Richardson was first introduced to HPS as a committee member from one of HPSâ&#x20AC;&#x2122; first members, Mercy Memorial Hospital in Monroe, Michigan. From there, he was welcomed into the HPS family, where he began growing the HPS Ohio market. After 17 years of service, Paul hung up his hat and ventured into retirement. With his free time, Paul plans on relaxing and spending time with his family. Jerry Welsh was part of the HPS family for 31 years, 13 of which he was the leader and face of HPS. As president and CEO, Jerry was part of many decisions and kept the HPS members in the forefront. His knowledge of GPOs and the industry was essential in keeping HPS ahead of the competition. Jerry entered into retirement with plans to travel and to volunteer with the Hire Heroes USA organization; helping veterans find employment. Congratulations to all of our HPS family! We wish you well in retirement.

3275 N. M-37 Highway P.O. Box 247 Middleville, MI 49333-0247 Phone: (800) 632-4572 or (269) 795-3308 Fax: (269) 795-9788 www.hpsnet.com