The Premier healthcare alliance, an organization serving more than 2,000 not-for-profit hospitals and health systems, has issued a plea to its contracted hospital suppliers to keep prices down during the current economic downtown.
With margins that usually hover near 2 percent, hospitals have always been on the edge, even before the current Wall Street meltdown trickles down to providers, said Mike Alkire, president of Premier Purchasing Partners.
In an October 23 letter, Alkire asked Premier's suppliers to "hold the line on price increases," though most of them project to increase prices by 3 percent to 40 percent, according to a Premier survey. Alkire also asked to suppliers to provide hospitals with flexible alternative financing options and pay term flexibility.
"I'm sure you will agree, it is in all our best interests to have a strong and financially secure healthcare supply chain," Alkire said. He added Premier would work collaboratively with suppliers to hold down contracted prices.
Hospitals get hit from all sides when loans and federal budgets are tight, Alkire said.
"With reduced tax revenues (and) state and federal deficits that have and will balloon, we are already seeing significant efforts to cut hospital payments in states such as New York and California to make up for the shortfall," he said. "We expect this to be a reality that will lead to significant cuts in hospital payments in 2009."
According to a recent Kaiser Family Foundation Medicaid annual report, 30 states expect "significant budget shortfalls" in their fiscal year 2009 budgets.
"We're just beginning to see the impact of the economic slowdown," said Diane Rowland, KFF's executive vice president.
In his letter, Alkire additionally called on suppliers to increase advocacy efforts in Washington "to improve the industry climate wherever possible."