Together, we make a differenceAnnual Review 2014 -15

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Dear Members,

We often hear that the sustainability of our healthcare system is contingent upon our ability to work together as a country. At HealthPRO, we are proud that we are facilitating the collaboration of more than 800 hospitals across Canada. When we work together, we make a difference. To be truly effective, our collaboration has extended beyond our membership to the industry as a whole. In meeting with senior executives from across these stakeholder groups – our membership, the supplier community, government and healthcare associations – the most common question I was asked was, “what more can we be doing with HealthPRO?” With their increasingly limited resources, our members recognize the savings and efficiencies we are delivering and want to participate in more of our contracts and services. Suppliers recognize the business opportunity of our collective national volume and want to hold more contracts with HealthPRO. And government and healthcare associations who seek our collective expertise want to know more about the work we are doing to impact issues that matter. When we come together, we make a difference and provide more value to the Canadian healthcare system. Thank you for your support. We look forward to our continued collaboration. It is what makes the difference.

Cynthia Valaitis, President and Chief Executive Officer

HealthPRO Procurement Services Inc.

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Together, our leadership has yielded significant achievements in affecting industry change.

We Affected Positive Change

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Supply disruptions continue to be a serious issue and we take action every day to mitigate their impact. Kathy Boyle, Vice President, Pharmacy Services was pleased to accept Health Canada’s request to assemble and chair a national group for the purpose of developing a guidance document to mitigate drug shortages through contracting and procurement. This important document is now available to all healthcare stakeholders on www.drugshortages.ca/drugshortages.asp.

Drug Shortages

Early warning of imminent or possible drug shortages by suppliers is one of the best tools to mitigate drug shortages, allowing stakeholders to effectively plan for patient needs. But, for the last several years, reporting shortages has been a voluntary process, through an industry-operated website, www.drugshortages.ca.

When Health Canada launched a nation-wide Drug Shortage Public Consultation Forum, HealthPRO facilitated the response of more than 50 per cent of our membership, whose input pointed to the ineffectiveness of this approach.

Following these submissions, Health Canada announced the mandatory reporting of shortages, a significant step forward in tackling this daily occurrence. Recognized for her expertise, Ms. Boyle has been asked to consult on the legislation and how the information should be reported to be most useful.

Mandatory Reporting

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Patient Safety

Patient safety is at the core of HealthPRO’s pharmacy product evaluation process. By following the highest industry standards, including those published by the Institute for Safe Medication Practices and the Canadian Society of Hospital Pharmacists, we help mitigate labelling issues that can lead to patient error and near misses.

Throughout the contract lifecycle, we continue to make recommendations to improve patient safety. Due to our interventions, suppliers have made 26 changes to labels. Today, suppliers consult with us in advance of their design and manufacturing process to ensure they get it right the first time.

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Together, we drive innovation

Innovation

Healthcare stakeholders have recognized that innovation can lead to better health outcomes at less cost. HealthPRO has taken a leadership role to advance this conversation and ready the market for adoption.

Krista Stagliano, Vice President, Materials Management, assembled a panel comprised of a national medical device association, a supplier and healthcare providers, who shared their views on the barriers, opportunities and tangible ways to move innovation forward at the national Healthcare Supply Chain Network (HSCN) Conference. This frank discussion highlighted key takeaways that the audience could bring back to their organizations.

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By working with HealthPRO, members can take advantage of centralized efforts that do not need to be duplicated individually.

We Centralized National Efforts

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In response to the Ebola outbreak, together with our members we established a national Infection Prevention and Control Task Force, who identified Personal Protective and Infection Prevention and Control Products required to provide safe patient care. Working with suppliers, HealthPRO confirmed inventory levels, product alternatives and established pricing agreements.

Leveraging this work, we established permanent Vendor of Record agreements, ensuring members have the information they require on hand, should we encounter a similar future event.

Pandemic Planning

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Each of our business segments bring their own unique industry challenges that are addressed through the right contract strategies.

We Delivered the Right Strategies

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Successful Strategies

CHALLENGE

STRATEGY

SUCCESS

Materials ManagementPharmacy

Drug shortages are a big cost to the system.

HealthPRO mitigated their impact and introduced competition through our Open Market strategy, providing

suppliers who have an alternate version of a medically-necessary

drug immediate access to a HealthPRO contract opportunity.

It is only through our aggregate

national volumes that the market was of great enough interest to attract suppliers’ participation.

Today, we are no longer relying on one supplier for six critical

drugs.

Members need custom solutions.

HealthPRO introduced Multi-Supplier awards in two new

product categories, ensuring members can make customized decisions while

benefiting from the savings of a national initiative.

70% of our growth in Materials Management has come from

Multi-Supplier awards.

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5% 25%10% 15% 20%

7.2% Average Savings

This year’s round of contracts generated an average savings of 7.2%. Some members reported savings far exceeding this average, including a provincial Shared Service Organization, who reported 20% savings over their previous contracts.

Materials Management Savings

20%Provincial SSO

5% 25%10% 15% 20%

Pharmacy Savings

In 2015, we completed the largest RFP in our history. Notwithstanding the high percentage of sole source products in this round of contracts, we delivered a 1.7% overall price reduction and significant savings in some notable categories.

16%General Trade Items

21%Split Awards

Savings

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$41 M returned since 2010

Product back order

Submit claim

Returned tomember

Pharmacy Generics Savings

on 8 drugs

35% 40% 45% 50% 55% 60%

58%Pharmacy Generics

Contract Differential Refund Service

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As members look for more ways to collaborate, avoidduplication and make the best use of resources, we willcontinue to expand our procurement services and growbeyond our traditional hospital base for the benefit of thehealthcare system as a whole.

The Future

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40%Savings

New Services

Signature Services

HealthPRO’s Signature Services offers members customized contract solutions forprocurement needs that fall outside of HealthPRO’s national contract offering. Signaturecontracts can be developed for an individual member or a group of members who wish to collaborate. Members set the award criteria and make the decisions while we handle the rest, allowing hospitals to benefit from optimal savings and efficiencies.

Through this service, Hemodialysis contracts were secured for an Ontario hospital, with the dialyzer contract generating savings upwards of 40 per cent, and which are now available to all members across the country.

Capital Equipment

We now bring our national buying power and procurement expertise to Capital Equipment, following the many requests of our members over the years. Although the service was recently launched, a contract for hospital beds is well underway. We look forward to working in collaboration with our members to bring them the highest quality capital equipment products efficiently and at the best price.

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Molecules BiologicsMolecules

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As complex molecules derived through living organisms which can more effectively target serious disease, biologic drugs are increasingly forming a greater portion of hospital budgets. Similar to how generics replace sole source innovator drugs when patents expire, Subsequent Entry Biologics (biosimilar forms of innovator biologics) are entering the market and are quickly becoming an area of focus for pharmacy procurement.

Due to the unique and highly specialized nature of these drugs, HealthPRO is forming an advisory group and will call upon international experts to ensure we have the right contract strategies in place for our members.

The Future of Pharmacy Procurement: Subsequent-Entry Biologics

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This year, we were pleased to welcome the North East Community Care Access Centre, who are already benefiting from the aggregation of our national efforts.

We will continue to expand beyond our traditional hospital base to benefit the entire healthcare continuum and beyond.

Delivering More Value by Expanding Beyond Hospitals

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Within the context of our global industry, it is important that we learn from markets beyond Canada.

We recently met with the Chief Executive Officer from a group purchasing organization from the National Health Service in the United Kingdom. We were struck by our similarities and the opportunity to learn from each other.

Additionally, in our efforts to understand the complexities of contracting for biologic drugs, we are beginning a dialogue with an expert in Finland to learn from their experiences with hospital contracting for Subsequent Entry Biologics (biosimilars).

We will continue to develop these relationships and explore other forums for the exchange of information, ensuring that our members in Canada benefit from the best of global experience.

We will continue keeping our stakeholders connected and informed of the difference we are making. This year, HealthPRO will establish a presence on LinkedIn, taking our message and exchanging knowledge with the millions of healthcare professionals in Canada and beyond.

International Exchange

Communications

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Entering our 20th YearIn 2016, we will enter our 20th year of business. We are committed to offering more of what our members require and further expand our services for the benefit of the Canadian healthcare system.

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Thank you for your support.It is what makes the difference.

HealthPRO Procurement Services Inc. | 5770 Hurontario Street, Suite 902, Mississauga, ON L5R 3G5 | P: 905-568-3478 / F: 905-568-5283 | www.healthprocanada.com