Premier Inc.

Serving 1,700 hospitals and more than 43,000 other health

care sites, Premier Inc. is the largest health care alliance in

the United States dedicated to improving patient outcomes

while safely reducing the cost of care. Owned by 200 not-forprofit health care providers and health system organizations,

the alliance enables the owners to share services and

programs aimed at improving the quality and costeffectiveness of clinical operations. Premier’s three business

units provide the following services: group purchasing and

supply chain management, insurance and risk management,

and informatics and performance improvement tools.

Headquartered in San Diego, Premier has offices in

Charlotte, N.C. and Washington, D.C.

Focused on the Goal

Premier’s “Big Hairy Audacious Goal” is for its member

hospitals to deliver the best, most cost-effective care in the

nation and for the alliance to have a major influence on

reshaping health care. To that end, the alliance has focused its

business units on disciplines where outstanding opportunities

exist to drive measurable improvement and performance

breakthroughs. The success of this strategy is evident:

• Hospitals that make up the Premier alliance have

validated more than $2.5 billion in savings over the past three

years achieved through cooperative purchasing and

participation in Premier’s other services.

• Premier has led the group purchasing community in

establishing standards for ethical business practices and

methods to drive ethical practices. Through Premier’s

efforts, all of the major health care organizations involved in

cooperative purchasing have committed to publicly reporting

key information. 

• Premier’s customer satisfaction levels of over 90 percent

significantly exceed industry benchmarks. 

• Premier’s group purchasing business unit ranks first in

the industry in annual volume of goods ($27 billion) bought

through group arrangements. 

• Premier is partnering with the Centers for Medicare 

and Medicaid Services (CMS) in a voluntary national

demonstration project aimed at improving the quality of

inpatient health care. Through the Premier Hospital Quality

Incentive Demonstration, CMS is rewarding top performing

hospitals for high quality care by increasing their payments

for Medicare patients. To date, the results show that

participating hospitals have shown dramatic improvements in

quality and performance. More than 1,200 lives have been

saved among heart attack patients and quality of care has

increased 12 percent in the 260 participating hospitals.

• For the past four years, the profitability of Premier

Insurance Management Services (PIMS) has significantly

outperformed the medical malpractice industry average, an

indication of proper pricing of loss exposure and

management of loss.

• Health Informatics’ comparative databases of health care

performance indicators are the most comprehensive in the

industry, and the business unit’s market share, as measured by

number of clients, exceeds its nearest competitor by more

than two-fold.

The success of these business units is shown through

Premier’s financial achievements.

2006

Award Winner

National Institute of Standards and Technology l Technology Administration l Department of Commerce

Baldrige National Quality Program

Malcolm Baldrige National

Quality Award

Named after the 26th Secretary of Commerce, the

Malcolm Baldrige National Quality Award was

established by Congress in 1987 to promote excellence in organizational performance, recognize the

achievements and results of U.S. organizations,

and publicize successful performance strategies.

For more information, see http://baldrige.nist.gov/
• Between 2002 and 2006, Premier’s consolidated pre-tax

operating income increased from approximately $140 million

to approximately $223 million, equaling or exceeding that of

the alliance’s largest competitor. Total revenues rose from

approximately $410 million to over $500 million.

• During the same period, savings and cash returns to

stockholders increased from approximately $180 million to

$804 million. 

• Operating margin grew from 35 percent in 2003 to 50

percent in 2006 and exceeded that of Premier’s largest

competitor in all years, while operating expenses have

remained well below those of that competitor.

Ethics and Leadership

Premier has taken a leadership role in promoting best

practices in ethical conduct, transparency, and accountability

within its own organization and throughout the industry. In

1998, Premier instituted a Corporate Values Program and an

employee Values Conference at which employees and senior

leaders together discuss Premier’s Core Values – focus on

people, integrity, passion for performance, and innovation.

Premier’s Code of Conduct goes well beyond that of 

the Healthcare Industry Group Purchasing Association

(HIGPA). In 2005, Premier’s leadership sparked the creation

of the Healthcare Group Purchasing Industry Initiative, a

voluntary association of health care GPO’s to encourage and

sustain best ethical and business conduct practices.

Premier also has taken a leadership role in product safety

and environmental concerns. In 1999, Premier founded and

maintains the Premier Safety Institute to provide

information, resources and tools to promote safety – not just

among member hospitals, but throughout the health care

industry. Premier’s Environmentally Preferable Purchasing

program provides information and resources about products

and services that are environmentally friendly. 

Customer Satisfaction

The hospital purchasing market is mature, with virtually

100 percent of hospitals aligned with at least one Group

Purchasing Organization (GPO). Thus, retaining current

members is key to maintaining the scale of membership

required to attract competitive group contract terms. 

• Overall retention of hospital members increased from 94

percent in 2002 to approximately 97 percent in 2006 and

annual survey results show satisfaction levels above industry

benchmarks.

Premier attributes this loyalty largely to the fact that the

company’s customers, who are also its owners, work closely

with Premier and its employees to achieve their mutual goals.

The most knowledgeable and engaged customers are on

Premier's board of directors or on various owner committees

that advise the board and the company’s sourcing committee

and advisory groups. All of Premier’s owners and other

customers have ready access to the company’s information,

staff, resources and services, particularly through Premier’s

field staff and its customer solution centers. 

Supplier performance has a powerful impact on customer

satisfaction. So, Premier established a Supplier Quality

Program to ensure that Premier, its customers, and its

suppliers share the same goals, and to provide a way to

document and review supplier performance and reward

supplier excellence. 

• Between 2003 and 2005, the number of contract

suppliers who have qualified for the program increased by 71

percent, bringing Premier closer to its goal of a 100 percent

qualified contract supplier base. 

Focus on People

Premier’s core value of “focus on people” embodies the

company’s commitment to providing a safe, positive work

environment and opportunities for career growth. Learning

and development practices are designed to enable Premier’s

employees to meet the customer’s requirements now and in

the future, and cover new hire orientation, diversity, ethical

business practices, management and leadership development,

process management and improvement process, specific 

business unit skills, and employee, workplace and environmental safety.

Premier has established advanced employee development programs, including Premier’s High Performance

Development Program, The Leadership College, and tuition

reimbursement. For leadership succession, the company uses

the “Talent Pipeline” process to identify and develop future

leaders. Results demonstrate that all these efforts are 

paying off. 

• The percent of vacancies filled internally improved from

21 percent in 2003 to 32 percent in 2006, which exceeds

Saratoga Institute’s best practice benchmark of 22 percent for

the past three years.

The company is driven by a “pay for performance” 

philosophy. Employees receive annual compensation 

incentives based on overall corporate performance and the

attainment of unit or department goals. High performers are

rewarded with annual lump sum or base pay increases, and

every employee is eligible for variable incentive pay. Premier

continues to improve its internal efficiencies, resulting in

steadily increasing income per employee and outperforming

its largest competitor. 

• Between 2003 and 2006, operating income per employee

grew from $144,000 to $225,000. 

For more information:

Ginny Starnes, Communications Manager

Premier Inc.

2320 Cascade Pointe Blvd. 

Charlotte, NC 28208

Telephone: (704) 733-5336

Email: Ginny_starnes@premierinc.com

Web site: http://www.PremierInc.com