New Neoforma Offering Sheds Light On Crucial Hospital Supply Spend Information To Reveal Savings Opportunities

On-demand spend intelligence solution, currently in pilot, provides clear, ongoing visibility, empowering hospitals to monitor and control supply spending

San Jose, CA - July 25, 2005 - Neoforma, Inc. (Nasdaq: NEOF) a leading provider of supply chain management solutions for the healthcare industry, has developed a new solution that provides hospitals with a comprehensive analysis of their total supply spend to optimize contract compliance, negotiate more competitive pricing with suppliers and drive greater cost-effective product utilization. Extending Neoforma's advanced data management infrastructure that draws on robust industry content sources and product expertise, Neoforma's new on-demand spend intelligence solution delivers accurate, ongoing visibility and greater control over supply spend to drive significant cost savings.
Several hospitals are currently in pilot with the new solution. Neoforma expects to launch the fully hosted spend intelligence solution to the broad market later this year, making it a unique hospital-focused offering in a competitive market that includes several supplier-developed or homegrown products.

“With accurate and timely information about my spend, I can strategically arm myself in financial conversations with senior management, clinicians and suppliers, and therefore am able to more effectively drive meaningful changes in contracts and our physicians' use of preference items,” says Mike Brown, director of purchasing for University Health Care System, Augusta, Ga., who is piloting Neoforma's new solution. Brown manages more than $45 million in annual supply spend for the 551-bed hospital. “Importantly, because the solution is delivered in a hosted model, using it does not take a toll on our IT department. I expect the new solution to open up new avenues for savings for University.”

Brown, a supply chain management expert who entered healthcare from manufacturing two years ago, adds that the industry knowledge and provider focus of the Neoforma team are critical attributes when looking for a supply chain partner. “It's great to have Neoforma as a trusted partner to tackle the data management and maintenance needed to support spend analysis on an ongoing basis, saving me time and resources that can be used for other priorities. In addition, because of Neoforma's unique provider philosophy and approach to supply chain problems, I'm confident in the quality and accuracy of the data used to populate the reports. Neoforma understands the supply chain and what hospitals need to have success in cost-savings initiatives.”

Memorial Health System, a 562-bed hospital in Springfield, Ill., also is participating in Neoforma's pilot program to support the hospital's overall best practice supply chain initiatives. The hospital, which has an annual supply spend of $105 million, has a goal to reduce supply costs by $2 million each year, and is on track to meet or exceed that goal this year, largely due to new insight gained from supply spending.

“Neoforma provides tools that strengthen my strategic contributions to my health system. Built on Neoforma's data framework, the on-demand offering provides a cost-effective way for Memorial Health System to access and maintain robust spend intelligence reports that will help me meet my strategic cost-savings goals,” says Kevin Voigt, Memorial's system director of materials management. “In addition, we've had excellent results over the years working with Neoforma on our supply chain challenges, and I'm excited to contribute to the development of an important new Neoforma product offering so that we together can continue to bring value to the industry.”

Hospitals have struggled to identify cost savings opportunities in the supply chain due to a lack of visibility into spend information. With tens-of-thousands of products and vendors to manage, purchasing databases quickly become outdated, making it nearly impossible for executives to clearly understand how purchasing dollars are actually being allocated. Without a sound spend intelligence initiative, hospitals cannot rely on existing data or processes to assess total spend in major product categories or how products should be priced under existing contracts. Hospitals, therefore, have been limited in their ability to identify savings opportunities, according to Dan Eckert, president and chief operating officer of Neoforma.

“Supply expenses, which account for up to 30% of a hospital's spend, should be one of the first targets of hospital cost reduction efforts, especially for executives looking for opportunities to redirect monetary and resource savings into important clinical care initiatives,” Eckert says. “By garnering accurate, timely and ongoing visibility into their own supply spending trends based on the foundation of clean, accurate and categorized data Neoforma provides, hospitals will now be armed to more cost-effectively utilize resources and negotiate with vendors. We are proud to offer a new solution that sheds light onto hospital supply spend, an area that's been in the dark for too long.”

Neoforma's solution for on-demand spend intelligence delivers a comprehensive, up-to-date view of a hospital's supply spend, enabling healthcare organizations to uncover ongoing supply chain savings opportunities. Leveraging Neoforma's advanced data services and rich product and content resources, the new solution's sophisticated analysis tools deliver visibility into a hospital's spending trends and contract utilization, in addition to highlighting opportunities to negotiate more competitive supply contracts and identify contract-related savings opportunities. Delivered in a hosted environment without the expense of traditional software applications or investment needed into content resources, Neoforma's spend intelligence solution gives decision makers a cost-effective way to focus quickly on target areas of interest and drive ongoing cost savings by: Maximizing the benefits of contract pricing, Shifting spend from off-contract to contract items, Increasing volume aggregation and optimizing the number of suppliers, Identifying potential overpayments, Conducting more effective vendor negotiations, and Improving the management of product utilization.

Source : Neoforma

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