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She seeks to slice price hospitals pay

People – January 2005

She seeks to slice price hospitals pay
By Chris Roush

As a student at South Mecklenburg High School in the 1970s, Susan DeVore worked weekends at Mercy Hospital typing its policy-and-procedures manual. It helped her understand how a hospital works, she says. She returned a decade later as its controller and director of finance.

Now, she’s president of Charlotte-based Premier Purchasing Partners LP, which helps more than 1,500 hospitals around the country cut costs by buying supplies in bulk. Her father worked for its predecessor in the 1970s. “I keep going full circle,” DeVore, 45, says.

Premier Purchasing Partners is part of San Diego-based Premier Inc., which is owned by about 200 nonprofit hospitals and health-care systems. DeVore oversees the buying of about $19 billion in medical equipment and other needs from more than 800 suppliers each year.

Because of her clout in the industry and changes she is making in the purchase of medical supplies, she was named by Modern Healthcare magazine as the 67th most-powerful person in health care — ahead of people such as U.S. Surgeon General Richard Carmona. “I think the industry perceives that we’re trying to do something very different.”

She was born in Fairbanks, Alaska, and grew up in Alabama, Pennsylvania and Germany. Her father ran hospitals in the Air Force. When he retired from the military in 1974, the family moved to Charlotte. He went to work for SunHealth Alliance, which merged with two other companies in 1996 to form Premier Inc.

After earning a bachelor’s in business from UNC Charlotte in 1981, she worked as a health-care consultant for accounting firm Ernst & Whinney. She left in 1984 to become controller at Mercy. “I really felt like I needed the credibility of working in an operational role for a significant period of time within a hospital to truly understand it.”

She returned to health-care consulting in 1989 with Ernst & Young, helping hospitals and health-care companies with financial planning, operations and mergers and acquisitions. She left in 2002 to start her own consulting company, but Premier called soon after. Because of her father’s history with SunHealth Alliance, “I felt obligated to at least listen to what it was.” She joined Premier in August 2003.

She has had to evaluate its operating procedures because of criticism that it and other group-purchasing organizations were buying supplies based on fees paid by suppliers instead of price or quality. Some, including a U.S. Senate subcommittee, have accused them of taking kickbacks. But her main task is to cut costs. A new initiative is applying a buying tactic used by retailers. Called a reverse auction, it pits suppliers against each other in bidding for business. Six reverse auctions cut costs 19%. Her goal is to save $68 million by improving operating performance and lowering costs at Premier’s hospitals by 2007.

The challenge, she says, is getting large drug and medical-device companies to cut their prices. She hopes to persuade them by emphasizing the amount that Premier hospitals spend each year and by considering competing products. “We need to create more competitive friction with suppliers to drive prices down.”

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