Our LOGO Charting Your Course to Optimal GPO

Our LOGO Charting Your Course to Optimal GPO and IDN Relationships Computer-based Training ABC Company, ABC Company with logo, ABC Company logo and positive results for life are U. S. and/or internationally registered trademarks of ABC Company AG. Other ™ marked brands are trademarks of a ABC Company company. TM* Trademark of its respective owner. © 2013 ABC Company. Confidential. For Internal Use Only

Introduction/ Objectives Charting Your Course to Optimal GPO and IDN Relationships Upon completion of this section, you should be able to: Understand the role of GPOs and IDNs in the contracting process Understand Surgical Solutions process to obtain a GPO agreement Be able to decipher a GPO agreement based on Quick Facts Know where to locate GPO agreement information Understand where to obtain GPO information about your accounts

The Basics New pressures have changed the GPO contracting landscape. Government/Medicare costs escalating Hospitals need to reduce costs Influx of Low Cost suppliers Reinventing themselves into more of a consultants role Separating categories into smaller product groups Most awards are multi/dual source awards versus sole Did you know… Today, virtually every hospital in the U. S. belongs to at least one GPO. More than 70% of all hospital purchases are made through GPO contracts, and GPOs contract for purchases with an annual value in the range of $150 billion

Why Do GPOs Exist? GPO agreements enable ABC Company access to their members Access enables Field Sales teams to convert, standardize, and consolidate vendors to reach GPO voting members in both committed and non-committed accounts Penetration and presence in accounts allow ABC Company to introduce new technologies that build leverage and disrupt the competition Pricing integrity and profitability are maintained for GPO members of like size and compliance ability

GPO Defined GPO (Group Purchasing Organization) Group purchasing organizations (GPOs) were created to help hospitals and other providers to pool their purchasing power to secure significant discounts on virtually all medical and other hospital supplies. Negotiates pricing/contracts on behalf of its members with the objective of lowering overall costs Hospital pays GPO an annual fee to negotiate on their behalf Manufacturers pay GPO’s a fee to market their agreements to the hospitals and drive compliance Large IDNs and Systems typically are the owners of the GPOs As the GPO’s membership expands, its ability to leverage purchasing power decreases

Today’s GPO Landscape GPOs are enabling their members to establish geographical buying groups Embracing coalitions and collaboratives which are driving standardization Providing greater transparency to our pricing via intranet tools Educating Integrated Healthcare Networks (IHNs) on best practices. that focus on enhanced collaboration between physicians and supply chain Add Ascension Health logo

Today’s GPO Landscape GPOs are trying to reinvent themselves to ensure they bring value to their memberships Embracing coalitions and collaboratives which are driving standardization Providing greater transparency to our pricing via intranet tools Educating IHNs on best practices. that focus on enhanced collaboration between physicians and supply chain

Integrated Delivery Network (IDN) A network of facilities and providers working together to offer a continuum of care to a specific market or geographic area (also referred to IHN-integrated healthcare network) Developed in the early 1980 s, IDNs emerged to address common concerns like capitation, excess capacity, decreased margins, and complaints from patients regarding access Frequently, the GPO contracted price is seen as the starting point for IDN/vendor negotiations Self contracting by IDN; s is on the rise: this trend started with commodities and is now picking up speed with physician preference items Includes many types of associations across the continuum of care and one network may include a short- and longterm hospital, HMO, PHO, PPO, home health agency, and hospice services. Where do I put this? CLICK HERE FOR EXAMPLES

Examples Kaiser, Tenet, Partners Health System, IHC, UPMC, Northshore/LIJ Health System For example: Dignity Health is also part of Catholic Care Group (CCG – 1 of 6 IDNs) and is also voting members and shareholders of Premier

Why are GPO’s successful? Lower total purchasing cost for small and large Providers* Provide supply chain support to Provider through contract negotiation, value analysis and other additional services Replaces some hospital full time employees (FTEs) Providing consultant type roles for cost reduction * Providers defined as hospital, system, coalition, alliance Insert business to Business Image – helping somebody consultant

GPO Segmentation The various types of GPO’s, IDNs and other purchasing entities GPO Type Description Examples Proprietary Manage outsourced supply chain Own/manage/lease members Highest compliance to agreements- “mandate” Med. Assets/Broadlane Health. Trust ROi Alliance Members own GPO (equity owners, shareholders) High to moderate compliance- “expect” Novation Premier Voluntary Members pay to participate Moderate to low compliance- “voluntary” Amerinet Med. Assets/ Broadlane. VA/ Government

A GPO Agreement Insert e ve retained th a h t a th s N D itals/I m behalf of hosp nd services fro a n s o d t o o en g r em fo re g s An a ntract O to secure co P G a f o es ic serv pliers. ds designated sup ce for the goo ri p t es w lo e get th the GPO is to f o l a o g ry a The prim its members. or services for ecific or program sp l a n io g re Award Types l, a n o ne single nati ry or service Sole Source: O r a defined product catego act fo sources supplier contract p su ic if ec urces sp Two er contract so li p p Dual Source: su ic if ec o sp More than tw Multi Source: Insert picture of Quickfacts Pricing: Non-Committed Tiers- minimum compliance Revenue Tiers – requ needed ire specific revenue to gain pricing ire 85% complia . Committed Tiers requ e and are revenue base Re- work too much nc text d Greater committed reve nue= better pricing Most GPO’s try to ne gotiate “fixed” pricing Some agreements will for the term have price increases as Term: Typically 3 years with va sociated with them rious option years Letter of Participation (LOP): Member required to sig n an LOP or other eq uivalent document in be “tied to the agreem order to ent” in order to activat e pricing Standardization Analys is: Many agreements requ ire Standardization an alysis to ensure they ar the criteria of the agre e meeting ement

Local Agreements Used when the volume and compliance of an IDN, Purchasing Coalition or Hospital exceeds the highest tier offered on a GPO contract that they may request special pricing that is better than the agreement. In these cases, an local agreement is negotiated directly between ABC Company and the IDN, Purchasing Coalition or Hospital. These agreements typically are an extension of the GPO agreements and we pay the same administrative fees to the GPO. In rare instances we may pay fees to the IDN, Purchasing Coalition or Hospital. Please consult your National accounts team before entering into any local agreements. Fees range from 1 -3% depending on whether contract is sole, dual or multi-source. These agreements will be driven by the Strategic Accounts Team or Sales Leadership. Re- work too much text .

Surgical Solution Current GPO Agreements • • Can be streamed into earlier Surgical Solutions currently has 42 Active GPO agreements slides or did Approximately 75% of our business runs thru a GPO agreement you know Number of Agreements by GPO MA/BL 2 Novation 9 VA/DO D 5 Health Trust 6 Amerinet 11 GPO Agreements by Business Unit AST Only 4 Premier 9 Su. S Only 18 Hernia Only 9 AST/Su. S 8 AST/Su. S/ Hernia 3

Leveraging the GPO Agreements Key Representative Actions • Monitor Compliance to grow market share or take revenue • Introduce New products • Ensure the safe and efficacious use of our portfolio Key Resources Use SFDC to identify GPO – Go into SFDC and go to the 'Reports' section and search for the following report. S 2 Account List with Primary GPO and locate your account • Offer Development Tools • The seller/RM should put a work request in via Business Analysis Tool (BAT). http: //web 01/cc/salesforce/home. xsql? menu. Style=horizontal • They can then run up to three different “what if” pricing scenarios, by themselves, on current usage • If they have competitive usage in an excel format, they would then send that into their Offer Development Analyst along with the BAT work #. • They would then get an analysis and Executive review from Offer Development between 2 -5 day, maybe sooner. • Pulse Connect GPO site (https: //pulseconnect. ABC Company. com/groups/gpodiscussion-board)

Marketplace Changes – Procurement Strategies Recent Marketplace Trends: Third Party E-Sourcing There’s been an increase in hospitals self-contracting as they look to revisit their capabilities and approaches to improve their overall supply cost budget. This is not just focused on price, but total cost. Hospitals and Health Systems are hiring sourcing consultants to handle the sourcing and live bid process of many expense categories to create a more transparent and flexible marketplace. The process is all done through a hospital and supplier online portal. This on-line negotiation and bidding platform provides the flexibility to source nearly every expense category in a hospital, allowing clients to negotiate contracts during a live-bid Re-and work too current muchandtext. suppliers. process. This ensures the best terms value from prospective Reverse auctions is another e-procurement strategy used by purchasing and supply management organizations to reduce spending as part of strategic sourcing and other supply management activities. Can call this out in blurb: Third Party Sourcing: Benefits to hospitals: outside party to manage the process with vendors and hospital stakeholders to help increase savings for hospitals

Charting Your Course to Maximize GPO and IDN Contracts Congratulations. You have reached the end of this module. Thank you for investing the time to understand how GPO……. can positively impact your success at ABC Company. The following questions were developed to test your understanding of the material just covered. You are expected to get a score of 90% or higher.