NDC signs first GPO deal with Amerinet
Edition: October 2005 - Vol 13 Number 10
Making good on a promise to obtain for its members “equal competitive access” to the non-acute care market, Nashville, Tenn.-based National Distribution and Contracting Inc. signed its first medical-surgical distribution contract with a national group purchasing organization: St. Louis-based Amerinet.
The three-year agreement gives participating NDC members the right to serve as authorized distribution agents for Amerinet, says NDC Senior VP of Member Services Gary Skura, who has taken the lead role in pursuing GPO contracts. NDC members will have the right to sell Amerinet contract items to their customers at the Amerinet price. Skura says the contract also contains language that addresses all products (including non-contracted products) that Amerinet members might need.
“This contract is a win-win for both parties,” says Skura. “NDC members gain access to the Amerinet contract file, and Amerinet members can be serviced by the distributors they currently do business with.
“All our members want is equal competitive access,” he continues. “This contract allows them to run the race without the competition getting a head start. NDC’s largest segment of distribution is in the non-acute market, and this agreement gives them access to pricing that allows them to compete on the basis of service, not price.”
The agreement works for Amerinet, too, says President Todd Ebert. “It helps us offer more distribution coverage to our non-acute care members,” he says. “It expands our footprint.”
Obstacles? What obstacles?
Although Amerinet has a number of authorized distribution agreements, the NDC agreement is its first with a group of distributors for medical-surgical products. (The GPO has a contract with a group of distributors of paper products.)
“Gary [Skura] helped provide us the confidence we were looking for,” says Ebert. Amerinet reviewed its existing commitments with non-acute care distributors (including some NDC members) to assure the NDC agreement did not violate any of them.
Another key element in sealing the deal was NDC’s ability to provide unified reporting on behalf of all its members. “Our members want to know how they’re supporting our contracts, so we need to provide them with those benchmarks,” says Ebert.
Says Skura, “We couldn’t have gone to any GPO unless we were able to convince them that we could do rebates and sales reporting. NDC has spent a great deal of time building a sales administration department, so we can feel confident that accurate sales reporting can be relayed to a GPO.” Each month, participating members will be required to transmit to NDC an electronic report on sales to Amerinet members. NDC, in turn, will consolidate that information and send it to Amerinet several days later.
NDC will also provide rebate services to its members and associated manufacturers. “To date, we have been successful in making arrangements with our manufacturer partners to process these rebates,” says Skura. “We can give them one document for all member sales, which is efficient and accurate, thus assuring them correct rebate reconciliation.”
The agreement should drive volume for each NDC member as well as the NDC warehouse in Nashville, adds Skura. “We can now produce rebates for our members, which gives them the opportunity to embrace our master distribution model and still gain access to the adjusted cost for a particular contract,” he says. “Now that NDC has the ability to produce rebates through authorized manufacturers, [our members] can buy products from [the warehouse] for the standard acquisition cost, and we will file the rebate for them.”
Who will participate?
More than one year ago, Skura put together an advisory council of 15 NDC members to explore GPO agreements. “I told them ‘I want to understand what you can live with in a contract, and I want to go out and get it,’” he says. Indeed, NDC members must agree to certain “dealer rules of engagement” spelled out in the contract. The first NDC members began signing up Aug. 1. Amerinet needs 45 days to process each NDC member into its system. “Not all 274 NDC distributors will participate in this contract,” he says. “But I do see us having a significant number.”
“We’re excited about the contract,” adds Ebert. “We’ll be looking to NDC for some of their manufacturing capabilities to support our private-label line.” Amerinet’s private-label program is called “Choice.”