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Washington hospitals join forces to launch distribution center

Looking to reduce supply chain costs, four of Washington state’s largest healthcare providers are joining forces to open a distribution center.

Seattle’s Swedish Medical Center is partnering with Providence Health and Services of Renton, the Multicare Health System of Tacoma and Central Washington Hospital of Wenatchee to launch the Distribution Operations Center. Officials of the four systems expect to do $120 million worth of business in 12 to 18 months and achieve savings from centralized ordering, contracting and logistics. Representatives of the four health systems will serve on an oversight committee that will manage the DOC’s operations.

The four health systems are all part of VHA, Inc., the Irving, Texas-based national healthcare network, and the ProvSource Alliance for Supply Chain Management and will use VHA’s contracting company, Novation. VHA serves more than 1,400 hospitals and 28,000 non-acute care providers nationally and reportedly saved its clients $1.47 billion in 2009.

“Despite the financial pressures imposed on our hospitals from dwindling reimbursements, a lagging economy and increased costs, our hospitals collectively strive to deliver high-quality care to the patients in our community,” said Keith Howells, general manager of the new Distribution Operations Center, a 40-employee, 59,000-square-foot facility located in Lacey. “DOC will provide the efficiencies and cost-savings that will enable us to continue to realize that goal.”

“Repeatedly, we have seen our members benefit from the enhanced supply-cost savings generated by aggregating purchasing volumes and providing standardized product lines,” added John Thomas, senior vice president and executive officer for VHA Pacific Northwest, one of VHA’s 16 regional offices. “Centralized ordering and logistics will bring yet another level of enhanced savings to the participating members by increasing their operational efficiencies far beyond what they could achieve independently.”

Swedish Medical Center is a 100-year-old three-hospital, 12-clinic health system located in and around Seattle. MultiCare, a not-for-profit system founded in 1882, is made up of four hospitals – Allenmore Hospital, Good Samaritan Hospital, Mary Bridge Children’s Hospital and Tacoma General Hospital – and several primary care and urgent care clinics, multi-specialty centers and hospice and home health services. Providence is a not-for-profit system based in Renton and serving 27 hospitals and numerous clinics in Washington, Alaska, Montana, Oregon and California. Central Washington Hospital is a community hospital serving the north-central part of the state.