Dave Edwards of Premier, Inc. speaks on supply chain leader series

In a recent Supply Chain Leaders Series call, ANAE interviewed Dave Edwards, VP, supplier relations and contract uptake at Premier Inc (Charlotte, NC). Premier Inc (Charlotte, NC) is a healthcare performance improvement alliance of approximately 2,900 U.S. community hospitals and 100,000 alternate-care sites. Although Premier is primarily owned by its hospitals and health systems, an IPO in September 2013 opened up about 20 percent of the company’s ownership stake to the public markets. Premier now trades on NASDAQ under ticker symbol “PINC.” Premier works with, and on-behalf of its members to find more cost-effective models while simultaneously improving care quality. Premier’s largest segment, its group purchasing organization, contains about 2,400 hospital members. The remaining 500 hospital members primarily use Premier’s other functions: technology, tools, consulting, etc.

Dave Edwards is an enthusiastic champion of creating win-win scenarios through collaboration, particularly between healthcare providers and suppliers. He has nearly 30 years of experience in healthcare sales, marketing, and management. His background includes a proven record of success as part of a Fortune 50 company, a start-up-device company, and as a partner in a small medical device manufacturer. For the past 12 years, Edwards has been an executive with Premier Inc. In his current position as VP, supplier relations he is responsible for supplier relations, contract uptake (sales), and business development. During his tenure with Premier, he has helped propel the alliance’s purchasing volume from $12 to $40 billion. He has been married to his college sweetheart Andrea for 27 years, and they have three sons.

Some of the topics Edwards covered are:

What Premier is doing for its 100,000 non-acute and alt-site facilities:

Edwards says the fastest growing part of Premier is in non-acute sites that provide care to the entire continuum. “We grow consistently 20-25 percent per year in the continuum of care. We are really growing in two ways – through contract penetration (getting current entities that are [registered] with Premier to use more of our products and services), as well as adding new members,” says Edwards. These facilities include surgery centers, SNFs, doc-in-the-boxes, physicians’ offices, etc. – from “hospice on one end and birthing centers on the other.” In the short term, the company is working on procure-to-pay solutions for smaller customers, but also trying to work with distribution partners who have larger coverage areas. Long-term, Premier believes hospitals will become the driving force that arranges other types of providers under an ACO or ACO-style model. Premier is focused on finding models and supplier partners to help its members coordinate care across the continuum in an efficient, cost-effective way.

The shift in preferred payor, from private insurance to Medicare:

Through its “Medicare Break-Even” program, Premier is helping hospitals analyze their sources of income and find strategies to adapt to the changing reimbursement structure. “Almost every hospital today… typically lose[s] money on Medicare, they lose even more on Medicaid, but they make it up with private insurance,” says Edwards. “Today’s worst payor is about to become tomorrow’s best payor.” The company is bringing in the analytical data behind its GPO contracting, coupled with its other tools and services and wrapping it all around its consulting capabilities to help hospitals survive and thrive in a Medicare payment environment.

Effects of the shift in power between the clinical decision maker and the economic decision maker for purchasing decisions:

Hospitals are focused on taking down costs, and according to Edwards, they would rather cut unnecessary spending on “stuff” before they make cuts to staff. This objective elevates the power of the traditional purchasing executive and “the economic decision maker is gaining power at the expense of the clinical decision maker” says Edwards. Reps previously dealt with decision makers like physicians or nurses whose objectives were clinically minded, or otherwise dealt with purchasing executives who were responsible for smaller arenas. However, as hospitals and IDNs acquire and group-up with non-acute and alt-site facilities and assume responsibility for their costs (and thereby their purchasing decisions), reps will likely deal with executives with bigger things in mind, like “productivity, efficiency, and waste; things that re-deploy assets in different ways; total life-cycle costs; inventory turn; etc.,” continues Edwards. “It’s up to the supplier community to build a more robust story.”