AmeriNet Grows In New Directions

Edition: November 2001 - Vol 9 Number 11
Article#: 1094
Author: Rick Dana Barlow

ST. LOUIS --The events of Sept. 11 didn't dampen attendance at AmeriNet Inc.'s annual Supplier Conference.


Amid decisions by other organizations to either postpone or cancel their events, the St. Louis-based GPO felt that the best way to honor and respect the thousands who perished and those working on the ensuing recovery and reconstruction efforts was to conduct business as usual. An estimated 400 national accounts executives attended the conference.


After a moment of silence for the victims of the attacks and a heartfelt invocation by Brent Christensen, AmeriNet's vice president of national account marketing, the GPO reported respectable growth among its various contracting programs for the fiscal year 2001, which ended Sept. 30, and outlined a number of key initiatives for 2002.


By the Numbers


Total contract purchasing volume for fiscal year 2001 was $5.225 billion, up 7 percent from the previous year's $4.9 billion. During the last five years, AmeriNet has posted a cumulative 49 percent growth in total purchasing volume. (See chart) The GPO also noted that it generated more than $260 million in annual savings for its members.


Booking $1.575 billion in annual purchases, AmeriNet's Medical Surgical program saw modest growth for the fiscal year, up a mere 1.6 percent from the previous year's $1.55 billion. Todd Ebert, AmeriNet's executive vice president, attributed the meager results to cuts in supply budgets. Indeed, AmeriNet members spent $1.65 billion for med/surg supplies and equipment the prior year. Still, med/surg accounts for 30 percent of the GPO's total volume and continues to represent its second-largest program.


Among the highlights of the Medical Surgical program were the expansion of the ''breadth and competitiveness'' of contracts, and the addition of agreements in surgical instruments and orthopedic softgoods, said Ebert. The GPO also emphasized the increased usage of national, regional and specialty distributors.


AmeriNet's largest contracting program – Pharmacy – recorded $2.325 billion in annual purchases, 5.7 percent higher than the $2.2 billion in fiscal year 2000. Ebert credited several factors for the growth: AmeriNet's national pharmacy distribution agreements, nine new AmeriNet Choice private-label offerings, clinical outcome information from the pharmacotherapeutic strategies program, and the implementation of MedContrax's Contract Processing Network to validate pricing and maintain a clean database.


Among AmeriNet's other major contracting programs:


•The Laboratory and Diagnostic Imaging program volume jumped nearly 17 percent to $770 million, up from $660 million the year before.


•Nutrition and Facility Services rang up nearly 15 percent in growth to $390 million from $340 million in fiscal 2000.


•Administrative Services and Information Resources, which covers consultative services, human resources and other general business management areas, posted a 4 percent gain in fiscal 2001 to $135 million, up from $130 million the prior year.


The largest dollar-volume growth, however, occurred in AmeriNet's smallest programs. For example, its Clinical Services program for physician purchasing soared 50 percent, racking up $30 million in volume compared to $20 million the previous year. Ebert attributed the growth to improved packaging and target marketing.


Meanwhile, AmeriNet Choice, the group's private-label program, marked a 28 percent growth rate, up to $8 million from $6.25 million the year before. Ebert attributed the growth to enhanced portfolios in several contracting programs spanning such products as soaps, sanitizers, lotions, disposable protective apparel, diagnostic and monitoring electrodes, sterile and non-sterile kits, sterile trays, custom procedure trays and blood pressure monitoring products; and immediate distribution support and increased ''traction'' in the non-acute care segments. AmeriNet Choice is headed by Dale Wright.


Membership


Ebert acknowledged that AmeriNet's corporate membership roster slipped 3 percent in fiscal year 2001, but pointed out that the decline was offset by higher overall purchasing volume. Hospital numbers remained relatively flat. The number of participating hospital-based physicians and long-term care facilities actually fell in fiscal 2001. (See chart) Ironically, these two segments represented the GPO's largest membership spike during the previous fiscal year.


A bright spot for AmeriNet emerged in the steadily growing non-acute care segment, including clinics and ambulatory surgery centers. Non-acute care facilities generated $1.09 billion in annual purchases in fiscal 2001, or 21 percent of AmeriNet's total volume. That's 10 percent higher than the $984 million achieved in fiscal 2000 and nearly 45 percent higher than the $753 million recorded in fiscal 1998. ''Yes, in non-acute care, AmeriNet has done it right,'' Ebert chimed.


Meanwhile, integrated delivery networks accounted for $1.929 billion in purchasing volume in the latest fiscal year, compared to $1.803 billion in the previous year.


Given the fact that IDNs and non-acute care facilities represent 60 percent of AmeriNet's total volume (hospitals represent the remainder), Ebert rhetorically asked attendees if they could pinpoint the group's focus going forward.


Two Initiatives


AmeriNet will roll out two key initiatives in the new fiscal year, one involving enhanced contract commitments and the other involving new medical technologies.


Elite – the group's committed-volume program now comprising 25 contracts – will gradually make way for its replacement, to be called Elite Preferred, which will merge elements of Elite with AmeriNet's Options program used by IDNs. The new program will call for members to commit upfront on selected standardized contract purchases in return for the knowledge that they're receiving the ''best deals'' in the marketplace, said Ebert. AmeriNet will monitor compliance aggressively, he said, noting that ''Non-compliant members may lose access to participate, depending on their reasons for it.''


The GPO intends Elite Preferred contract purchasing to be electronically driven by participating members and suppliers, and to encompass 24 to 30 product categories. As Elite contracts expire, AmeriNet will transition participating members to the Elite Preferred program or to the base portfolio, depending on what they want to do.


The GPO's second key initiative is Health Innovations, a program to allow AmeriNet members the opportunity to evaluate new medical technologies and offer their input about new product design and development. The program comes amid accusations that GPOs stifle competition and innovation by shutting out small companies, as well as potential Congressional hearings on the matter.


AmeriNet members will realize ''advanced and preferential access to new technologies from fledgling startups to substantial companies, whether they reach the operating room, emergency room, physician office or home health,'' said AmeriNet President Bud Bowen. ''That's the most important thing to us – early access.''


Working with AmeriNet executives on Health Innovations is an advisory board comprising Joseph Kozikowski, M.D., managing partner, Proformant Inc., Framingham, MA; Robert Egan, founder, Egan Group LLC, St. Louis; and David Cassak, managing partner, Windhover Information Inc., and editor, In Vivo, Norwalk, CT. Kozikowski serves as executive director of Health Innovations, which formally opened its doors on September 1.


HUB and Education


Bowen also outlined plans for AmeriNet to support historically underutilized businesses (HUBs) by building and maintaining an active database of all AmeriNet primary and secondary HUB suppliers by product area. It has already identified and indexed more than 30 small and regional businesses that fit the profile. The GPO also has linked up to national minority business development organizations. ''These businesses represent new thinking, new products and new energy,'' said Bowen.


AmeriNet will provide its other suppliers with access to this information as a service. ''We're finding that our other suppliers want this information, because they're being asked to use [HUBs] as well.''


Bowen also announced a strategic alliance with the Educational & Institutional Cooperative Service Inc., a Hauppauge, NY-based group of more than 1,800 colleges and universities – including their medical schools – around the nation. The Cooperative represents about $260 million in annual purchasing volume. Under the alliance, Cooperative and AmeriNet members will have access to selected contracts within each other's portfolio.





AmeriNet's Purchasing Power        


Annual contract purchasing volume (in billions)        
































































1996$3.215
1997$3.5
1998$4.1
1999$4.45
2000$4.9
2001$5.225


Source: AmeriNet Inc., October 2001





AmeriNet's Membership Clout        


Annual corporate membership growth        
















































































































Membership TypeFY2000FY2001
Acute care hospitals1,9271,924
Clinics3,4063,840
Long-term care facilities1,8551,806
Physicians (hospital-based)5,9134,814
Ambulatory surgery centers9781,068
Integrated delivery networks*95103
Other (home health, independent laboratory, HMO, education and human services)711863
TOTAL14,79014,315


* Because AmeriNet's IDN statistics are already included in the individual membership categories, they are not included in the total.        


Source: AmeriNet Inc., October 2001