SCM Alliance, Inc.

SCM Alliance, Inc. (SCMA), a Florida Corporation, is a Regional Group Purchasing Organization / Healthcare Cooperative that is jointly held by its Patrons; Bethesda Healthcare System, Boca Raton Regional Hospital, Indian River Medical Center, Jupiter Medical Center and the Martin Health System. Each of the Patrons of SCMA is a Florida Not-For-Profit Corporation. The products/services purchased by SCMA are utilized by the Patrons (and their affiliates and subsidiaries) are for their own use in the provision of medical services to patients in the hospital setting. None of the products or services purchased by SCMA is resold to non-participants.

SCMA has implemented a mechanism to calculate, allocate, remit and report discounts recovered by each Patron. SCMA ensures that each Patron reports and records any received discounts on cost reports to federal and state agencies. Furthermore:

• SCMA and its Patrons recognize and comply with the disclosure obligation of Section 1128(b)(c) of the Social Security Act.

• SCMA is a Group Purchasing Organization (“GPO”) which meets the requirements of 42 CFR Section 1001.952(j), (the “GPO Regulations”) and makes the following representations regarding its GPO status:

o While SCMA does not customarily collect Administrative Fees (as defined in the GPO Regulations), SCMA’s receipt of any Administrative Fees is in compliance with the GPO Regulations;
o SCMA has a written agreement with each Patron that provides a formula for the distribution of any Administrative Fees / Rebates received by SCMA;
o SCMA is authorized to act as a non-exclusive purchasing agent for each Patron; The Patrons are not owned, directly or indirectly, by SCMA. The Patrons are not subsidiaries, directly or indirectly, of SCMA;
o Any discounts, rebates or price reductions (collectively, “discounts”) received by SCMA are intended to reflect discounts or other reductions in price within the meaning of 42 U.S.C. Section 1320a – 7b (b)(3)(A). Such discounts may reflect a bundled price. With regard to such bundled prices, SCMA relies on vendors to provide detail regarding the allocation of total net purchase dollars to the items and services provided by vendor.

SCM Alliance, Inc. is totally independent of any national GPO affiliation and is authorized to execute purchasing Contracts on behalf of its members. The SCMA contract development process is structured to deal directly with manufacturers while insuring compliance, commitment and strict confidentiality of all contract terms and NET pricing. It is our belief that this regional approach will enhance the overall value for the SCMA members.

SCMA was incorporated to achieve a competitive advantage to better assist our members in caring for their respective communities. It is the firm belief of the Board and Founders of SCMA that this can be most effectively achieved through the implementation of a Regional Contracting Entity that is the primary GPO of its Membership.

The only entities in today's marketplace that actually purchase and consume goods and services are the providers of healthcare. We believe that as providers, the members of SCMA can best achieve the desired results by working directly with the manufacturers of the goods and services to construct processes and contracts to enhance services and remove costs from our operations. Unique approaches to operational challenges and competitive markets on a regional basis can only be addressed regionally.

To a manufacturer of goods or services we can undeniably deliver that which few other organizations can -- compliance AND confidentiality. Either of these two components is only marginally beneficial without the other. However the success of SCMA is founded on our ability to deliver BOTH continuously and consistently. Furthermore, all benefits and/or resources directed by the manufacturers to SCMA are realized by its Patrons. We believe the manufacturing community will reward this model and recognize the importance of working directly with these types of emerging Regional networks.

Finally, we have no preconceptions or vendor preferences. Our guiding principal is the ability to deliver high quality, cost effective care to our communities. Therefore, we are committed to contracting clinically acceptable products that deliver cost effective results. As a direct result of SCMA having self-determination with respect to vendor selection and contract acceptance, most contracts are committed volume agreements. It is our belief that the ability of the vendor community to be assured of gaining market share in response to their commitments is essential in acquiring the most mutually beneficial and value enhanced proposals. It is our intent to develop a true partnership with each SCMA contracted vendor. This commitment is reflected in the fact that each contract will be long term in nature and contain flexibility to be viable for the future. Leverage of incumbent vendors with proposals from non-incumbent vendors is incongruent with our strategic plan. Rewarding aggressive proposals with long term market share commitments IS our strategic plan!

Understanding many vendors are hesitant to put forward their best proposal for fear of negative impact nationally is an unfortunate reality in today’s market. Favored nations, distributor access, benchmarking firms, and networking all undermine the confidentiality a vendor requires to make regionally strategic proposals. An understanding of this reality is the driving force in shaping the approach and structure of successful vendor contracts with SCMA.

Each SCMA contract will be constructed in such a manner as to provide for competitive invoice pricing as well as other non-invoice incentives like “Patronage Dividends” expressed as a percentage of the collective purchases by the Patrons of SCMA for a contracted product category.

Confidentiality will be maintained by securing this information from the marketplace. A policy decision of strictly limiting access to this information (i.e., limiting access of this information to limited individuals and utilizing written confidentiality agreements) has been made in order to support the absolute commitment to confidentiality of awarded vendors proposals! All aspects of the vendor’s proposal submitted will be considered “trade secrets” by SCMA and treated as such.