A Healthy Combination

While running between meetings on Thursday, I spent a few minutes reading Aberdeen's take on the recently announced CombineNet and University of Pittsburgh Medical Center (UPMC) joint venture announcement. Back during the .com era, JVs like CombineMed -- the name of this new venture -- were all the rage. But today, these types of deals are rare in the Spend Management world. That's because since valuations have cooled, the rationale for doing a JV must now focus entirely on tangible business value rather than financial hype. So in the current environment, when they do occur, it's worth paying close attention. Aberdeen believes that the new venture "is important for the cost-constrained healthcare sector because it allows hospital networks and medical centers to select the product, supplier mix, and contract terms that are optimal to their own needs, spending, and consumption patterns." Let's hope that CombineMed's success leads to cost containment in an industry which desperately needs to develop Spend Management programs. Healthcare costs represented 16% of US GDP in 2005 (up from 10% of GDP in 1985). As a country, the US can't afford to have this percentage rise any further. I believe that Spend Management will be the key to controlling the healthcare spending beast.

Jason Busch

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