MedAssets delivers $54M in sustainable cost reductions

MedAssets (NASDAQ: MDAS) today announced that Texas Purchasing Coalition (TPC), a member-owned supply chain management partnership, recently marked $54 million in sustainable supply spend cost reductions—surpassing its scheduled savings projection by three months. This milestone was achieved in just 18 months as TPC engaged MedAssets for innovative supply chain and clinical resource management solutions to lower the total cost of care delivery for its 11 health system members, representing 27 hospitals. The sustainable savings demonstrate the company’s unique cost management and clinical engagement service model, which transforms the hospital’s underlying cost structure.

Positioning for Financial Viability in Face of Healthcare Reform

MedAssets uses comprehensive performance analytics as key to its clinical engagement services. Physicians are invited to review comparable peer data on procedure and price relative to high-quality patient care delivery in order to gain clinical perspective on major expense items, such as implantable medical devices.

According to Geoff Brenner, president and chief executive officer, Texas Purchasing Coalition, MedAssets delivered a data-enabled procurement process and transformational services expertise that improved significantly the financial outlook for each TPC member through proactive physician engagement and enhanced purchasing practices. Utilizing the company’s industry-leading group purchasing (GPO) services and the aggregate purchasing leverage of TPC members, MedAssets deployed a comprehensive, strategic sourcing strategy to address key areas of TPC procurement including medical/surgical supplies, pharmaceuticals and physician preference items (PPI). Through a combination of MedAssets analytics and clinical transformation protocols, TPC was able to drive the behavioral change required to recognize and sustain the impressive gains created through MedAssets holistic approach to cost and clinical resource management.

“We have removed obstacles that seemed immovable in the past, and have drawn favorable reviews among our clinicians, as well as significant financial results,” said Brenner. “In particular, MedAssets analytics capabilities and clinical consultants created the bridge for TPC members’ physicians to be better informed on medical devices and strengthened our contract negotiations with suppliers. The change in our financial picture is exponentially better than before, and is an essential step toward sustaining our ability to continue to provide excellent patient care in our communities given the challenging economic environment.”

Creating a Sustainable Cost Structure to Thrive in a New Cost and Reimbursement Environment

TPC’s initiative underscores the urgent need for healthcare organizations to reduce their underlying cost structure now to get ahead of the negative financial impacts expected from healthcare reform.

“Supplies represent the biggest expense category after labor. Only those healthcare organizations that optimize clinical resource utilization and recognize meaningful, sustainable cost savings while delivering high-quality patient care are likely to survive the very real financial challenge related to healthcare reform,” said John Bardis, chairman, president and chief executive officer, MedAssets. “We understood years ago that the current cost structure of the U.S. healthcare system was unsustainable. MedAssets has had a core focus to develop comprehensive capabilities to help clients transform expense management and procurement functions to improve operating efficiencies and control costs—not only commodity supplies and pharmaceuticals, but also purchased services, medical equipment and implantable medical devices.”

Reimbursement rates continue to decline for U.S. healthcare providers, and additional Medicare rate cuts are expected to go into effect in 2013. Against this backdrop, MedAssets has a proven track record of helping healthcare providers of all types and sizes transcend fundamental cost containment strategies related to supply spend, which can consume as much as 40 percent of a hospital’s total operating budget—and of that amount, 20 percent is related to PPI. MedAssets delivers a single-source option for healthcare providers seeking innovative spend and clinical resource management strategies.

About Texas Purchasing Coalition

The Texas Purchasing Coalition (TPC) is a supply chain management partnership that operates across Texas. The TPC is comprised of 11 Texas not-for-profit health systems representing 27 facilities that have committed to work together to lower their supply costs. The TPC enables its members to be recognized as one large system, thus aggregating their purchase volume and commitment to maximize tiered pricing options, create unique value, and develop customized programs. Combined, TPC members represent approximately $800 million in annual supply purchases. For more information, go to www.thetpc.com.

About MedAssets

MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve financial strength by implementing spend management and revenue cycle management solutions that help control cost, improve margins and cash flow, increase regulatory compliance and optimize operational efficiency. MedAssets serves more than 180 health systems, 4,000 hospitals and 90,000 non-acute healthcare providers. The company currently manages $45 billion in supply spend and touches over $316 billion in total patient revenue annually through its revenue cycle solutions. For more information, go to www.medassets.com.

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