'A Push Toward Diversification'
The IPO, which had been rumored for months, comes as national GPOs face increased pressure from regional competitors as well as hospitals. As hospitals become more integrated, for example, they are taking on "increased aspects of the purchasing process," says Gene Schneller, PhD, a professor of supply chain management at Arizona State University.
Schneller notes that in recent years there has been a push toward diversification as the major GPOs, including MedAssets, Premier, and Novation have expanded their businesses beyond traditional supply chain services to include analytics, recruiting, and consulting services.
Although no details are available regarding how the proceeds of an IPO would be invested, both Schneller and Powell see the potential infusion of cash as an opportunity for Premier.
Investing in Supply Chain
Schneller says this is the time to for Premier to invest in supply chain management. GPO members, especially smaller hospitals, are challenged by the Patient Protection and Affordable Care Act to reduce costs. "The supply chain has visibility that it's never had before. Developing services and products that will bring better performance to the supply chain will be the key to success."
Powell says the cash raised will enable Premier to spend more heavily on building its analytics and consulting businesses. "Post-IPO, Premier has the potential to have an even stronger and more diversified business."