This contract will result in committed purchase requirements of $90,368,000 over a 3-year period and will be funded 100% by Hospital Enterprise Fund I revenues. This contactor provides the contractual services in consideration of administrative fees paid to it by its suppliers. For every 12 months of the contract term, the County’s aggregate purchases reported by the suppliers must equal or exceed the agreed-upon minimum. If it does not, the County would be required to pay contractor a percentage of the committed purchase requirement.

This contract meets the needs of the County by providing Group Purchasing Program services. Vizient is a health care Group Purchasing Organization (GPO) that, on behalf of participating organizations, negotiates, directly and through its contracting subsidiaries, agreements between suppliers and Vizient for goods, services, and intangible items. Under contract #76-789, Vizient will negotiate and enter into supplier agreements under which the County may purchase as a third-party beneficiary.  
  
Contra Costa Regional Medical Center (CCRMC) has been doing business with Vizient and its predecessors for over thirty years, as Vizient services 50% of the healthcare organizations in the United States, including 97% of all academic medical centers and over 20% of ambulatory care providers. Vizient’s members represented more than $130 billion in purchasing volume for 2021. As a result of mergers and acquisitions over the last few years, there are now only three (3) viable GPOs for membership consideration. They are Vizient, LLC, Premier, Inc., and HealthTrust Premier, Inc. was considered, but its presence on the West Coast has been diminishing over the past ten-plus years. The inability to network with other local GPO members was a factor, as CCRMC may desire to participate in the member clinical, supply chain, pharmaceutical collaborative, and regional supply coalitions.  
  
HealthTrust was considered, but due to the rigid requirements for achieving value, later rejected; HealthTrust, provides its members with exceptional pricing on products; however, its model works on the principle of one size fits all. Multiple vendor contracts within a product category are unavailable for member selection; negotiations with and committing their membership to one vendor offering within a product category is what allows for exceptional pricing. But the need to utilize various vendor pricing would leave the member without a contract and cause it to negotiate its contract pricing, terms, and conditions or request custom contracting services from HealthTrust for additional fees, increasing cost, and decreasing value. Further, HealthTrust does not have a presence on the West Coast.  
  
CCRMC chose to stay with Vizient because by switching GPOs, CCRMC would no longer be able to access Vizient’s pharmacy portfolio. Vizient’s pharmacy program delivers exceptional value to members due to its rigorous weekly price review and bi-weekly mini-bid process. Switching GPOs may increase the cost of pharmaceuticals and would eliminate CCRMC’s ability to purchase Vizient’s private-label generic (NovaPlus) products. The volume of the product, supplies, equipment, and services purchased by Vizient members across the Nation allows CCRMC to benefit from the value of participating in Vizient’s supplier agreements. Most prices, contract terms & conditions, and value-added services received are significantly better than what CCRMC could achieve alone.  
  
In consideration for the services provided under this contract, Vizient will retain administrative fees from its suppliers based on County’s purchases, with that supplier, except as otherwise provided in a supplier agreement. Vizient will share a percentage of the administrative fees reported by a supplier with the County based on the County’s purchases (for covered items) reported by suppliers during each calendar quarter for the duration of this contract. To meet the contractual annual committed purchase requirement of $90,368,000 over the initial 3-year period, the County’s aggregate purchases reported by suppliers must equal or exceed the contractual spend amount specified every 12 months of the contract term ($29,237,000 2022/23, $30,114,000 2023/24, and $31,017,000 2024/25). Supplier sales reported to Vizient for 2020 and 2021 for CCRMC exceed $36,000,000 annually. Annualized sales for FY 2022 are estimated to be over $35,000,000. Additionally, CCRMC collaborates with its covered facilities to transition their purchases to the Vizient Contract Portfolio where possible, increasing the annual purchases reported through Vizient, further ensuring the County’s commitment purchase requirement is met each year.  
  
This contract obligates the County to indemnify Vizient against third-party claims arising from the County’s negligent act or omission or breach of the master agreement, and if County resells purchased materials. This contract includes a limitation of liability limiting Vizient’s liability to an amount equal to annual services fees and reimbursable expenses in the applicable statement of work. In order to secure the supplier pricing afforded by this contract, the County can only terminate the agreement for an uncured breach by Vizient or bankruptcy by Vizient.  
  
This request to the Board is retroactive due to a delay in negotiating the contract terms between the contractor and County staff.  
  
Approval of this new Contract #76-789 allows the contractor to provide services through September 30, 2025, with two (2) additional 1-year terms by amendment.  
  

If this contract is not approved, CCRMC will no longer receive the price discounts offered under the participating supplier agreements and will not benefit from the terms and conditions Vizient negotiates on behalf of its members. As a result, the price CCRMC pays for pharmaceuticals, supplies, and equipment would immediately escalate.