• Rules & Regs
• Supplier Side
• Hospital Watch
• E-Biz
• Studies & Stats
• The Hub Has Spoken
• Consultant, Heal Thyself
• Consultant, Heal Thyself
• Reference Desk
• Smells Like Synergies . . .
• Consumer Price Index, March 2000

Prepare for the worst. The CDC (http://www.fda.gov/cdrh) has published a strategic plan for public health agencies to respond to biological and chemical terrorism. A successful response depends on training and research, says the report, as well as stronger ties between the medical professions and emergency management, military and law officials. See Morbidity and Mortality Weekly Report, April 21, or visit www.cdc.gov/mmwr.

Nine and counting. Two more states passed needle safety laws, raising to nine the number of state laws. Gov. Angus King Jr. signed Maine's law April 14, followed six days later by Georgia Gov. Roy Barnes. OSHA (http://www.osha.gov/) already mandates sharps safety programs, but some state laws go beyond that minimum.

Obey or pay. OSHA inspectors reportedly are scrutinizing sharps safety, looking not only at devices but also at containers and exposure control plans. Lest anyone think the federal or state requirements are optional, consider this: In the April Journal of Healthcare Safety, Compliance & Infection Control, attorney Patti Tereskerz predicts prosecutions of corporate officers for willful violation if failure to supply safety needles causes an injury or death.

Reuse regs cometh. July is the target date for new regs on reuse of single-use medical devices, says Larry Spears, an enforcement director at the FDA's Center for Devices and Radiological Health. CDRH director David Feigal was called before Congress to explain reuse and what the agency intends to do about it. The goal, he said, is to "protect the public health by assuring that the practice of reprocessing and reusing single-use devices is safe and effective and based on good science."

Back talk. OSHA continues to hold hearings on its proposed ergonomics standard. They'll run for 10 days in Portland, Ore., this month. Some, such as the AHA, call for scrapping the standard as proposed. But assistant labor secretary Charles Jeffress says it could prevent three million injuries over 10 years, saving $9 billion annually. A final standard is expected by year end.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

• Clinipad Corp., (http://www.clinipad.com/) Rocky Hill, Conn., recalled a number of antiseptic skin preparations due to sterility problems. An urgent letter sent to facilities nationwide recalled swab sticks, prep pads, towelettes, ointment tubes, dressings, and other items manufactured as far back as Jan. 1, 1997. Clinipad ceased operations March 28 due to the severity of the problem. The recall is complicated since the products are distributed under various brand names and private labels and are packed in many manufacturers' procedure kits. For details search under "recall" at www.fda.gov/cdrh.
• OSHA's mandate for health care providers to use safety devices is spiking demand at big needle manufacturers. A bit of good news: Becton Dickinson, (http://www.bd.comv/) Franklin Lakes, N.J., the nation's largest supplier, says it's ahead of schedule in boosting production in two out of three categories. Blood collection products are now available without allocation; so are catheters, generally. But syringes such as SafetyGlide are in such great demand that BD predicts it will be another year before supply catches up.
• The Web portal Exchangesite, set up last month by giant health care manufacturers, found more big-name supporters this month when Becton Dickinson, Guidant and Boston Scientific (http://www.bsci.com/) signed on as participating suppliers.
• Boston Scientific Corp., (http://www.bsci.com/) Natick, Mass., defended its NIR stent products in court against Johnson & Johnson's (http://www.jnj.com/) BX Velocity Coronary Stent, in a patent infringement dispute. BS licensed certain technologies from Medinol that went into the NIR design, a flexible cellular structure that keeps the stent mesh flexible and blood vessels open. The suit claims BS has the exclusive right to sell that particular stent design.
• 3M Healthcare, (http://www.3m.com/US/healthcare/) St. Paul, Minn., reports steady sales in the first quarter, with revenues of $765 million and operating income of $193 million. Corporate earnings from all 3M divisions set a record, with profits of $487 million, a 27 percent jump from first quarter 1999.
• Cardinal Health, (http://www.cardinal-health.com/) Dublin, Ohio, continued a string of record-setting financials. Operating earnings grew 21 percent, to $345 million. Its Allegiance (http://www.allegiance.net/) subsidiary posted operating earnings of $93 million on revenues of $1.2 billion. Allegiance says its recent investments of more than $100 million in automation and technology are starting to pay off.
• McKessonHBOC, (http://www.mckhboc.com/) San Francisco, is retooling. The company added new senior managers to its leadership team, and refocused its IT business, discontinuing some products. The med/surg and pharmaceutical units are unified under a single executive, and a quality program is active company-wide. For the quarter, McKesson reported net income of $427.5 million, compared with a net loss of $61 million a year ago. Income from continuing operations was $61 million.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

• Tenet Health Corp., (www.tenethealth.com) Santa Barbara, Calif., reported its "best quarter in a long time," says chief executive Geoffrey Barbakow. Third quarter earnings grew to 48 cents per share at the for-profit company vs. 40 cents a year ago. What's more, the gain came on a smaller base of owned hospitals. Net operating revenues advanced 1 percent, to $2.85 billion.
• New York­Presbyterian Hospital's Lab Outreach Program signed an agreement with Abaton.com, (http://www.abaton.com/)Bloomington, Minn., to transmit clinical lab test results via a secure Internet channel to clients, mainly physicians' offices. The hospital is New York's largest academic medical center.
• Off-pump coronary artery bypass surgery is spreading. Lutheran General, Park Ridge, Ill., is the latest hospital to use the beating-heart method. For some patients, surgeons can now complete a bypass without placing the patient on a heart-lung pump. Lutheran General has three cardiac surgeons and a 10-bed cardiac ICU.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

• Several e-com companies are getting more involved with the medical purchasing infrastructure. One indication: Five companies now subscribe to the Health Industry Number system administered by the Health Industry Business Communications Council, (http://www.hibcc.org/) Phoenix. That's a step toward building the e-catalogs and item files needed to do true EDI via the Net sites now under construction. The subscribers: medibuy, medi-calbuyer, Neoforma, Pharmasmarket and Promedix.
• Med-eCommerce.com (dba MedicalSuppliesUSA.com), (http://www.medicalsuppliesusa.com/) Santa Rosa, Calif., is seeking funds to build up its site. The company already has the backing of a Silicon Valley venture capital firm. The company has a foothold in the physician office business through affiliated organizations that represent about half of the nation's doctors. CEO Lynn Detlor plans to expand from that base into a much broader market.
• Neoforma's (http://www.neoforma.com/) merger with Eclipsys Corp., (http://www.eclipsnet.com/) Delray Beach, Fla., spawned two lawsuits by Eclipsys shareholders, who aren't convinced the acquisition by Neoforma, Santa Clara, Calif., will generate value. Eclipsys's board of directors intends to defend its actions.
• Omnicell.com (http://www.omnicell.com/) filed an initial public offering to sell shares up to a maximum of $57.5 million. The company is expanding into the Internet with its Omnicell Commerce Network, the two Web services--Omnibuyer and Omnisupplier--that aim to make online purchasing easier. Omnicell started in 1993 selling automated medical and pharmaceutical supply dispensing cabinets. [Note: Materials Management furnishes news to MedCenterCity.com under an agreement with Omnicell.]
• John Gaida joined medpool.com, (http://www.medpool.com/) San Francisco, as vice president, supply chain services. Gaida will help hospital customers develop their purchasing strategies. Previously he was a VP for BD's health care consulting team. Before that he held executive positions at Brigham & Women's Hospital and Partners Health System, Boston.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

The Balanced Budget Act of 1997 cut too deeply, according to a study released by Ernst & Young and HCIA-Sachs. Overall hospital margins dropped to 2.9 percent in 1999, but margins would have been 5.5 percent without the BBA cuts, the study says. Medicare operating margins fell from 2.5 percent in 1998 to ­0.5 percent in 2000. Closest to the brink are the smaller hospitals: Total margins for facilities with fewer than 100 beds are below 1 percent. The Financial State of Hospitals Post-BBA and Post BBRA is at www.hciasachs.com.

The CDRH's (http://www.fda.gov/cdrh) Susan Gardner studied 24 hospitals to identify barriers to timely and accurate reporting of device-related adverse events. To improve reporting in a pilot project with the 24, Gardner recommends that hospitals:

• Allow reports to be made to a neutral third party
• Protect the identity of those filing reports
• Distribute a newsletter to help meet the communication needs of those making the reports
• Provide assistance to those making reports
• Provide feedback to those filing reports so that future information would be more helpful to the FDA

This article first appeared in the May 2000 issue of Materials Management in Health Care.

If you've been wondering when the medical products distributors would move into e-commerce, here's your answer. Five of the largest distributors announced plans to create the New Health Exchange, an Internet portal that they say will streamline purchasing of medical supplies and pharmaceuticals.

The founding companies--AmeriSource Health, Cardinal Health, Fisher Scientific, McKessonHBOC and Owens & Minor--committed $100 million to develop the portal, which should be open for business by year end. Their target customers are hospital networks and GPOs.

In a press conference April 18 the companies' CEOs described an open exchange that will seek other partners. Their goals: simplify the purchasing process, establish an industry standard for product information via common code numbers and electronic systems, offer online copies of thousands of product catalogs, and simplify order management and contract management.

An interactive roof

"We are five of the largest distributors. We supply a majority of the products needed for patient care, a total of $80 billion annually," said Bob Walters of Cardinal Health. Added Gil Minor of Owens & Minor: "Success here will mean health care distribution that's faster and more accurate. Today customers are confused by choices. Our exchange puts everything under one interactive roof."

Technical support and staff will come from the founders. McKessonHBOC, for example, has more than 4,000 IT personnel.

The portal will operate as a "commercially neutral" site, and savings gained by increased sales flowing through the site are expected to furnish the funding for the exchange's future operation. To learn more, visit www.-newhealthexchange.com.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

Several big consulting groups have made strategic changes in response to the changing nature of their hospital engagements and pressure from e-commerce companies raiding their ranks.

Johnson & Johnson's McFaul & Lyons group was absorbed into J&J's Healthcare Systems Consulting and Services, Piscataway, N.J. Hospitals were no longer asking for traditional expense management consulting, so that function was eliminated. Consulting now focuses on two functions: contract materials management, under Jerry Gribbons, and operational redesign, under Sally Luaces.

At Becton Dickinson, too, changes are under way. A downsizing was rumored but not confirmed by a spokes-person at BD Healthcare Consulting and Services, (http://www.bd.com/services) Franklin Lakes, N.J. Its consultants were heavily recruited by dot.coms, however. The most recent departure is John Gaida, who is now vice president of supply chain services for medpool (see E-biz). BD was already headed in the direction of onsite consultants and will continue to do so, the company says.

Departures from Allegiance's Higman (home.htm) operations have also been noted, with some landing at J&J. Allegiance, McGaw Park, Ill., says it has always favored onsite personnel in its engagements. Bottom line: There's less advisory consulting now and more hands-on operational assistance.

One bright spot for materials managers is that after consultants have made their changes, and particularly after hospitals have merged with interim staff running the purchasing operations, there's still a need for a full-time materials manager to step in and take the reins.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

• Novation (http://www.novationco.com/) signed a set of wound care agreements worth an estimated $61.8 million in sales. Vendors include ConvaTec, (http://www.convatec.com/) Skillman, N.J., for drainable barriers and pouches; Hollister, Libertyville, Ill., for barriers and wound collection devices; Carrington Labs, (http://www.carringtonlabs.com/) Irving, Texas, for hydrocolloids and gels; Johnson & Johnson Medical, (http://www.jnjmedical.com/) Arlington, Texas, for antifungals.
• Premier Purchasing Partners, (http://www.premierinc.com/) San Diego, and Sodexho Marriott Services, (http://www.sodexhomarriott.com/) Gaithersburg, Md. A renewal for housekeeping, food and nutrition, plant operations and maintenance, laundry, and integrated services.
• Consorta, (http://www.consorta.com/) Rolling Meadows, Ill., and GE Marquette, (http://www.mei.com/) Milwaukee. A patient monitoring contract that's expected to yield savings of $900,000 to Consorta member hospitals vs. previous contracts.
• Health Services Corporation of America, (http://www.hsca.com/) St. Louis, announced several partnerships with major manufacturers in connection with its Select committed purchasing program, slated to begin May 1. Vendors include 3M, (http://www.3m.com/US/healthcare/) St. Paul, Minn., in a sole-source committed contract for tapes and dressings, and Kimberly-Clark Healthcare, (http://www.kimberly-clark.com/) Roswell, Ga., in a three-year deal for sterilization wrap, surgical packs and gowns, and Ballard closed suction catheters, plus items such as masks, infection control apparel and exam gloves. Also, a three-year, sole-source agreement with Becton Dickinson, (http://www.bd.com/) Franklin Lakes, N.J., covers blood collection and other products, with corporate options for hypodermic products, safety products, IV catheters, needleless IVs and more.
• HSCA and Betco Corp., (http://www.betco.com/) Toledo, Ohio, a provider of chemicals, equipment and maintenance management programs. A three-year contract to improve building appearance, safety and cleanliness.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

Worth the wait. Two years in the making, the APIC Text of Infection Control and Epidemiology has been updated to reflect current practices, with expert input from 120 authors and 200 reviewers. Divided into two easy-to-handle binders, it includes all official APIC documents, guidelines from the CDC and OSHA, and samples of all APIC educational pamphlets. The index has also been revised for quick and easy use.

For even easier access to the information you need, order the CD-ROM version, which has search capabilities, hot links, abstracts and more. For more information or to order, visit www.apic.org, or call (202) 789-1890.

How do you rank? Gain a better perspective of your hospital's standing among its peers and uncover looming cost management challenges with two free, interactive tools from MECON. Find the tools at www.mecon.com.

With the MECON 25th Index, users enter a few key pieces of information to see how their facility stacks up against top performers nationwide, defined as those surpassing 75 percent of their peers. The index measures average expense per discharge, compares the user's statistics with top-performers in the MECON-PEERnext operational benchmarking database, and then calculates the overall savings opportunity.

The BBA Calculator gauges the potential impact of the Balanced Budget Act of 1997 on hospitals and health systems. Again, information is entered into a few simple fields, and the calculator estimates the effects of the cuts at the geographic level, helping users to understand the BBA's impact on plummeting operating margins.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

AmeriNet (http://www.amerinet-gpo.com/) was looking for an e-commerce partner. Tenet was looking for a GPO to add volume to its Broadlane venture. The result: a sweeping deal that covers both group purchasing and e-commerce.

Tenet Healthcare, (http://www.tenethealth.com/) Santa Barbara, Calif., will merge the contract portfolio of its GPO, BuyPower (http://www.buypower.com/), with that of AmeriNet, St. Louis, creating one of the largest medical/surgical purchasing programs in the country, with a portfolio of $7 billion in contracted purchasing volume. Together the two groups' hospitals purchase $15 billion annually.

The plan is for all online buying to flow exclusively through Broadlane's (http://www.broadlane.com/) portal, run by Ventro Corp. with ex-Tenet materials boss David Ricker as chief operating officer. All hospitals will have access to all contracts eventually. It's hoped that much of the portfolio melding will be done in the first year. However, full conversion is expected to take two to three years.

The unusual partnership of a large for-profit system like Tenet with a coalition of not-for-profit hospitals such as many of those in AmeriNet is a function of the cost-reduction strategy that's common to both, according to AmeriNet. The organizations hope to achieve two goals: access to the best contracts and a large gain in total purchasing volume.

The transaction won't become final until July 1, subject to due diligence.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

This article first appeared in the May 2000 issue of Materials Management in Health Care.

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