Contracting News & Notes

Recent headlines and trends to keep an eye on

Premier recommends modifications to Medicare Direct Contracting Model Premier Inc. (Charlotte, NC) recently issued a statement to CMS to recommend that, in light of its success, the Next Generation Accountable Care Organization (NGACO) program be extended or adapted. The NGACO model requires participants to take the greatest level of financial risk of any ACO model, Premier said. And yet, the organization recently announced that NGACOs reduced Medicare spending by $242 million in in 2018, achieving nearly $221 million in net shared savings. NGACOs that are organized in Premier’s data-driven collaborative realized nearly 30% of these savings, reducing total spending by more than $70 million and earning in excess of $63 million in shared savings. The NGACO model is scheduled to sunset at the end of this year. Premier has called on CMS to build on these successes by either extending the NGACO program or better adapting the new Direct Contracting Model to provide a stepwise progression between models for NGACOs.

CI Security awarded contract with Vizient, Inc. to provide managed detection and response services CI Security (Seattle, WA) was awarded a group purchasing contract with Vizient, Inc. (Irving, TX). CI Security is a Managed Detection and Response (MDR) services provider specializing in protecting networks of healthcare organizations and critical infrastructure from cyberattacks. The group purchasing contract also benefits members of Provista, Vizient's supply chain partner serving the non-acute market. Under the terms of the agreement, CI Security will offer its Critical Insight Managed Detection and Response solution to Vizient and Provista members via their group purchasing portfolio to provide critical insight into the health of their security posture and the ability to lower the impact of cyberattacks through real-time threat detection, investigation, and response.

IDNs, GPOs, and healthcare suppliers and distributors named to 2020 list of World's Most Ethical Companies Ethisphere has announced its 2020 list of the world’s “Most Ethical Companies.” This years list recognized 132 companies “for setting the global standards of business integrity and corporate citizenship.”

The list includes 15 healthcare related companies, including: ʯ 3M ʯ Baptist Health South Florida ʯ blue California ʯ CareFirst ʯ Cleveland Clinic ʯ Colgate-Palmolive Company ʯ Covenant Health ʯ HCSC (Health Care Service Corporation)

ʯ Henry Schein ʯ Lilly ʯ MetroHealth ʯ Premier Inc ʯ Kaiser Permanente ʯ Kimberly-Clark ʯ UPMC ʯ Vizient Inc

HealthTrust, Community Hospital Corporation renew exclusive supply chain relationship HealthTrust (Nashville, TN) and Community Hospital Corporation (CHC) (Plano, TX) have signed a long-term partnership agreement to strengthen the operating performance of community-based hospitals. CHC is a nonprofit organization that owns, manages, consults with and/ or advises more than 100 acute care and post-acute hospitals and healthcare facilities. The contract renewal with HealthTrust preserves the support structure and resources these community hospitals and non-acute providers have come to depend on to manage the escalating costs of healthcare delivery, the company said.

HCA reverses decision to close Plantation General Hospital when it opens new 200-bed facility next year HCA Healthcare (Nashville, TN) announced it no longer plans to close Plantation General Hospital (Plantation,

FL) when it completes a new hospital in Davie, Florida. After failing to win state Certificate of Need approval to build a hospital in Davie, HCA announced plans in 2016 to transfer Plantation General Hospital's license to Nova Southeastern University's campus in Davie. Under the plan, Plantation General Hospital would have shut down services, except for a standalone emergency department, after the license transfer. In 2019, the Florida legislature eliminated the CON law for most hospitals, paving the way for HCA to be able to build a hospital in Davie and keep Plantation General Hospital open. HCA expects to open the new 200-bed hospital on Nova Southeastern University's campus in Davie in early 2021.

Cleveland Clinic named No. 2 Hospital in the World by Newsweek Newsweek has ranked Cleveland Clinic the No. 2 hospital in the world, as part of its World’s Best Hospitals 2020 analysis. In the U.S., Cleveland Clinic again earned the No. 2 ranking, while four other Cleveland Clinic hospitals also were listed among the best hospitals nationwide: ʯ Cleveland Clinic Fairview Hospital ʯ Cleveland Clinic Florida-Weston ʯ Cleveland Clinic Akron General ʯ Cleveland Clinic Hillcrest Hospital

Cardinal Health names Jason Hollar as new Chief Financial Officer Cardinal Health (Dublin, OH) announced that its board of directors elected Jason Hollar as CFO, effective May 12. Hollar most recently was the CFO of Tenneco Inc., a global automotive products and services company, and previously was CFO of Sears Holding Corporation. As Cardinal Health CFO, Hollar will lead financial activities across the enterprise, including financial strategy, capital deployment, treasury, tax, investor relations, accounting and reporting. He will succeed Dave Evans, who has been serving as interim CFO. Evans will continue to serve as CFO of Cardinal Health through May 11.

Intalere cancels Elevate 2020 member conference Intalere (St. Louis, MO) announced it has cancelled Elevate 2020, Intalere’s Member Conference, May 11-13 (Nashville, TN) The company said it made the decision “because of the uncertainty surrounding the COVID-19 situation and keeping the safety and security of members, suppliers, and employees as a priority.” According to Intalere’s Chief Executive Officer Julius Heil, it was cancelled in accordance with the CDC recommendations on restricting large group gatherings over the next several weeks and, “our commitment to our members, staff and suppliers, and the need to keep them focused on care delivery and the needs of the community.”

Senior living facilities unable to access PPE needed for COVID-19 containment plans, Premier says Premier Inc. (Charlotte, NC) released survey results finding that more than twothirds of senior living facilities in the U.S. cannot obtain the necessary N95 masks, face shields and other personal protective equipment (PPE) that may be needed to care for current or suspected cases of COVID-19. Healthcare distributors have placed more than 700 unique PPE stockkeeping units (SKUs) on allocation due to COVID-19. Allocations are typically set to match the customer’s historic purchase volume in order to prevent unnecessary hoarding. A downside of this is that, while well intentioned, it may limit healthcare providers in the amounts they can buy, even if they have legitimate reasons for new, larger orders. This particularly may affect senior living facilities. For most hospitals’ and health systems’ facilities, PPE orders are common, as these goods are required to perform a range of activities, including surgeries, ICU care and infection prevention. However, most senior living facilities don’t perform critical care functions, and thus purchase almost no PPE at all. ʯ About 43% of the senior living facilities responding to the survey don’t have a consistent ordering history for PPE ʯ Of respondents that have a consistent purchasing history of PPE products, 87% are not receiving the full quantity of products ordered. effectively leaving them without a legitimate channel for purchasing supplies that may be necessary to protect workers and elderly residents in senior living facilities ʯ About 30% of senior living respondents reported no inventory of N95 masks ʯ 68% said they had limited to no ability to access additional masks ʯ Nearly 60% of respondents also indicated limited to no ability to access gowns ʯ Approximately 65% have limited to no ability to obtain disinfecting products such as wipes, spray and hand sanitizer ʯ 70% reported limited to no ability to acquire face shields and other facial protective equipment.

A Fluid Situation

As of press time, we were still not out of the woods when it comes to the global spread of COVID-19. Not by a long shot. While nations such as China and South Korea were expressing optimism that they had gotten things under control, Italy and Israel were on lockdown, and here in the United States testing for the disease was just beginning to ramp up.

And even when we do get a handle on containing the disease, there will be plenty of long-term implications, including the supply of products and services in healthcare. For instance: ʯ Supplies of PPE. In early March Premier released results of a survey finding that 86% of U.S. hospitals and health systems are concerned about their supply of face masks and other personal protective equipment (PPE) as the global spread of the COVID-19 coronavirus strains the supply chain. According to Premier’s purchasing data, hospitals and health systems across the United States typically buy 22 million N95 face masks a year. However, during the months of January and February, demand for N95s surged, up 400% and 585%, respectively, largely fueled by a heavy flu season and forward buying in anticipation of a coronavirus outbreak in the United States. The levels of demand suggest a minimum consumption rate of 56 million masks in 2020, nearly a three-fold increase in demand when compared to a typical year. ʯ Pharmaceuticals. Modern Healthcare reported in early March that the Indian government may hold 26 pharmaceutical ingredients and drugs made from them amid supply concerns stemming from the coronavirus, stretching an already fragile pharmaceutical supply chain. Much of the world’s supply of generic drugs comes from India, which relies heavily on China for their active pharmaceutical ingredients, according to the report. The levels of demand suggest a minimum consumption rate of 56 million masks in 2020, nearly a threefold increase in demand when compared to a typical year.

What does this mean for supply chain departments across the nation? In the event of possible disruptions and shortages, communication and collaboration with suppliers has never been more important. Do IDNs and health systems have a good grasp on their inventory levels? If supplies are low, what are some viable alternatives? Is there a plan in place for disaster response? These are just some of the many questions we’ll be looking at in the weeks and months to come.

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