HealthTrust EuropePurchasing Power for Healthcare

Fiona Chew – Director of Account Management

International Innovation Case Study – Entry of a US GPO into UK Healthcare Purchasing

US GPO Landscape

• Group Purchasing Organisations – aggregate purchasing volumes of US healthcare organisations to utilise leverage and negotiate effective contracts.

• First US GPO created 1910. Numbers grew slowly until last quarter of 20th C.

• Nearly every hospital facility in the US now uses the services of at least one GPO.

• Period of consolidation in the market. • Some “shopping around” by facilities to find the best GPO• Top 4 GPOs account for $155bn purchasing spend.• Saturated market – further consolidation and vertical

integration expected.

HealthTrust Purchasing Group (HPG)

• Established in 1999

• Commonly listed as 4th largest US GPO (following MedAssets, Premier & Novation)

• Headquartered in Brentwood, Tennessee (Nashville)

HealthTrust Purchasing Group (HPG)

• Manage over 1200+ supplier agreements representing over $21B of annual contracting volume

• Serves as the exclusive Group Purchasing Organization for over 4000 USA healthcare facilities

• Approximately 25% (1400) of the hospitals in the USA utilize HealthTrust as their sole Group Purchasing Organization

• Broad contract portfolio with “One Price For All” philosophy

• Customer focused - 99% customer retention rate

• 7-12% price advantage over other GPOs

• Acquisition of Consorta GPO - 2011

Horizontal Integration: HPG Innovation Enters the UK

• 1st April 2011 – HPG established “HealthTrust Europe”

• Formed via the purchase of Healthcare Purchasing Consortium – an NHS collaborative procurement hub.

• Jointly owned by HPG and HCA International

• HCA International - owner of 6 private hospitals in the UK e.g. London Bridge Hospital and 3 joint ventures with the NHS e.g. Harley Street at UCLH

• UK – strategic market entry

HealthTrust Europe

Our Mission

“HealthTrust Europe is committed to providing best value, significant savings and supply chain expertise to the health care sector across the broadest range of products and services. HealthTrust Europe will achieve its vision of becoming Europe’s number one group purchasing organisation by improving services to patients and the care they receive through best procurement solutions”.

Our Vision

“To be the leading European group purchasing organisation: delivering excellence to our members through dynamic and efficient procurement and commercial solutions”.

• Represent NHS Trusts nationwide• Contract in medical, pharmacy and corporate areas for our

members

HPG Worldwide Locations

We are global in scope– Headquarters for HCA, Parallon and HealthTrust

Purchasing Group are based in the U.S.– HealthTrust Global Sourcing office based in

Shanghai, China– HealthTrust Europe based in Birmingham, with

offices in London

• Members are expected to maintain a highly committed relationship with HTE by avoiding:– Self contracting efforts– Use of non-HTE services when service is available from

HTE– Use of other group purchasing organizations

• US GPO model is funded on basis of vendor admin fees– Small percentage fee paid by contracted vendors – Permitted by US “Safe Harbor” regulations– Admin fee is paid when a member uses the contract– Surpluses are repaid to members– Same model applied to creation of HealthTrust Europe– Enabled lower member “subscription” fees

• Innovative model = challenge to suppliers = pockets of resistance

Member Alignment & Vendor Administration Fees

European Expansion

• HealthTrust Europe = Strategic launch point for HPG into Europe

• Germany – strong existing GPO landscape

• Poland – no collaborative purchasing

• Challenge – local infrastructure, language barriers

Vertical Integration - Parallon

Consultative ServicesAnalyze, assess need and provide solution sets

End-to-end Revenue CycleImproved financial performance, cash flow and efficiencies

WorkforceStrategic labor, staffing and recruiting

Healthcare TechnologyTurnkey services, data warehousing and disaster recovery

Supply ChainProcure to pay, including logistics

Group PurchasingImmediate and sustainable procurement savings across all product and service categories

Project OptimizationActivates strategies and provides best-in-class PM support

Population Health ManagementPhysician affiliation structures, governance, management structure and key processes to address shared risk

• Launched in 2006 in the U.S.• Over 45 contract offerings in the U.S. and 6

offerings in Europe• 210+ members – domestic and international• $1 Billion in captured spend

CoreTrust Europe

CoreTrust Europe

CoreTrust Milestones:– 2006: Partnered with Blackstone– 2008: Partnered with KKR, Bain, Welsh-Carson & others– 2009: Completed “refresh” in multiple strategic categories– 2011: EU-based resources in the United Kingdom– 2012: Use of CoreTrust Europe agreements in EMEA &

APAC

Membership Sample:

Thank-you for listening

Fiona ChewDirector of Account ManagementM: 07984 598 576E: fiona.chew@healthtrusteurope.com