BAXTER EXPECTS UP TO 50% ANNUAL INCREASE IN SALES TO AMERICAN HEALTHCARE SYSTEMS

BAXTER EXPECTS UP TO 50% ANNUAL INCREASE IN SALES TO AMERICAN HEALTHCARE SYSTEMS under a corporate agreement announced Aug. 9. Baxter currently does about $ 325 mil. a year in business with AmHS hospitals, primarily in I.V. products. While the new contract is the first corporate agreement between Baxter and AmHS, the hospital buying group signed a sole-source agreement with Baxter for I.V. products two years ago. The new agreement covers all of Baxter's divisions and products, and should increase Baxter's volume with AmHS to between $ 2.9 bil. and $ 6.4 bil. over the five and a half year course of the contract based on a projected 25-50% annual sales increase. The agreement takes effect in September. The contract calls for volume-based price discount incentives to encourage AmHS hospitals to participate. AmHS consists of 34 multi-hospital system shareholders, representing, in turn, approximately 1,050 hospitals and nursing homes. An AmHS spokesperson called the Baxter accord the largest agreement ever made between a vendor and a multti-hospital system buying grop. Baxter Chairman Vernon Loucks noted that the contract is expected to extend beyond competitive pricing for supplies. "Clearly, we will save AmHS hospitals money on their purchases from us," Loucks said. "Yet we're committed to going beyond that by working closely together to create efficiencies and savings that we can both share, thus improving the cost effectiveness of health care." Specifically, the agreement calls for AmHS to work with Baxter in a number of areas, such as logistics, materials management, and information systems. Task forces of executives from both organizations will be established to handle the topics. The Baxter agreement is in line with the AmHS strategy of seeking broad corporate relationships. Similar agreements, for example, have been signed with DuPont, for products ranging from film to oil and gas, and with 3M, which supplies AmHS with everything from hospital products to billboard advertising. The accord also fits with the AmHS dual-source policy. One of the group's most recent corporate agreements is with Johnson & Johnson, a $ 750 mil. five-year pact that went into effect in January. The agreement covers all 12 J&J divisions, and includes products such as surgical instruments, would closures, catheters, intraocular lenses and orthopedic devices. AmHS also has corporate vendor contracts with Becton Dickinson, for needles, syringes and blood collection systems; Kendall Colgate; Fuji; and Winthrop Labs. Organized in 1984 via the merger of two buying groups, AmHS has facilities in 43 states, the District of Columbia, and several foreign countries. Its 34 shareholders reported total revenues of more than $ 11 bil. in 1987, and the group says its annual purchasing power exceeds $ 3 bil. Two new shareholders were approved by the board Aug. 9 -- Baptist Health Systems, of Knoxville, Tennessee, formerly part of SunHealth, and Immanuel Medical Center of Omaha, Nebraska.