FISCAL FEEDBAG. Medicare, along with private sector managed care companies are being lauded for launching financial incentive programs to encourage healthcare providers to meet goals for quality. Essentially, federal and private payers will give bonuses to hospitals and doctors that provide better care and achieve improved results. Taken another way, hospitals and doctors are being rewarded for doing their jobs and not screwing up. We won’t know for some time, if ever, whether this will truly work because higher quality healthcare can be attributed to many different things beyond financial incentives. But certainly it’s worth a shot. Of course, what a ripe deal this is if you can get it. That said, how intriguing this would be if materials managers or sterile processing professionals could share in a piece of this action? If hospitals really want to control their supply chain costs or prevent infections why don’t they offer similar incentives to the purchasing and central service staff? Imagine receiving a bonus check at the end of the year for properly cleaning, disinfecting and sterilizing instruments and equipment or better managing supply expenses through managed consumption, product standardization, accurate pricing and purchasing data? This sounds like a great job for the GPOs! They can demonstrate to the government how much they care about healthcare quality improvements, distribute what some government overseers and small manufacturers consider to be ill-gotten gains from allegedly anticompetitive activities and write those cash distributions off as charitable contributions. In a utopian world, this would appease the feds and smaller manufacturers (it can’t be totally about generating sales and profits through contracts, can it?), as well as improve healthcare quality, encourage hospitals and relieve patients. GPOs can call them freebates!

PERFORMANCE PAY. Speaking of paying for performance, Tenet Healthcare Corp. President and CEO Trevor Fetter "earned" nearly $3.7 million in 2004 as part of his compensation package. That includes salary, bonus, restricted stock awards (vested over a period of years) and tax reimbursement for relocating to Dallas. With Tenet trying to recover from a billing and accounting scandal, let alone blaming its financial misfortunes on the rising costs of supplies (He apparently forgot about the company he previously led – Broadlane – that is supposed to be reducing supply costs for Tenet. Somebody send him the talking points memo on how you’re supposed to promote related companies!) what would he "earn" for improving patient care and company operations given these new incentive programs being touted?

MONEY TRAIL. Even with its former CEO on trial for alleged accounting fraud (for the record, Richard Scrushy pleaded not guilty) embattled HealthSouth Corp. paid out more than $6 million in bonuses to several executives last year, according to a Securities & Exchange Commission filing. Meanwhile, here in the real world, healthcare organizations enmeshed in similar misbegotten circumstances most likely would freeze pay, eliminate perks and cap hiring.

THIRD PARTY. Two high-profile companies recently increased their stake in the healthcare industry. First, Accenture picked up the North American health practice of consulting firm Capgemini for a cool $175 million. That’s a good move for Accenture, which earlier launched an online supply chain academy. Accenture’s market plays demonstrate more of a commitment to healthcare materials management than all those big consulting firms could muster back in the 1990s. They also put some marketing pressure on the more specialized boutique consulting firms that have remained dedicated to the profession through thick and thin. Second, IBM agreed to purchase Healthlink, a firm that helps hospitals and clinics convert to electronic health records. It’s an interesting move for IBM, which The New York Times reported as "investments made in preparation for an expected surge" in healthcare information technology spending. IBM’s decision also seemingly trumps Oracle’s big splash entry in and subsequent pullback from the healthcare market. Now wouldn’t it be interesting if IBM acquired Neoforma?

HATS OFF. We lost Rene Moses on April 9 when he finally succumbed to pancreatic cancer after being diagnosed back in December. Moses, named 12 years ago the "father of sterilization," will be sorely missed by those who knew him and certainly by the very profession that benefited from his keen insights and wisdom – including this magazine and myself. Salute to Moses.