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BAXTER REORGANIZES INTO TWO GROUPS: HOSPITAL/ALTERNATE SITES

Executive Summary

BAXTER REORGANIZES INTO TWO GROUPS: HOSPITAL/ALTERNATE SITES and global businesses. Jim Tobin oversees the international group, which encompasses both the overseas operation and Baxter's medical specialties businesses such as diagnostics, cardiovascular products, blood therapy, etc. Lance Piccolo is heading Baxter's core U.S. businesses under the new arrangement, including products and services for U.S. hospitals, plus Baxter's alternate site activities. The move is the latest stage in a gradual evolution from the 10-group structure implemented immediately after the 1985 merger with American Hospital Supply. In a recent presentation at a symposium sponsored by The Wilkerson Group consulting firm, Baxter Exec VP Robert Simmons said that the change "signals [Baxter's] seriousness" toward maintaining its leadership in U.S. corporate sales. "Baxter now has its entire product and service offering for hospitals organized within a single group," Simmons said. "That arrangement will sharpen even further our efforts in distribution efficiency, system selling, stockless inventory and so forth." Baxter's corporate program accounts for almost 40% of total domestic sales of hospital products, Simmons noted. "We have contracts covering about 30% of all U.S. hospital beds, and our corporate-program revenue accounted for about 50% of Baxter's U.S. sales growth last year," the exec said. Long term, Baxter expects corporate sales to continue to outpace Baxter's overall growth, with corporate sales projected to double by 1992. Purchasing through groups will continue to increase, Simmons predicted. Currently, national consumption of hospital supplies is about $ 29 bil., he said, projected to grow to approximately $ 38 bil. by 1992. Of current spending, "more than three-quarters goes through systems," according to Simmons. American Healthcare Systems and Voluntary Hospitals of America account for 29% of the total, he added. "At the national level as well as the regional and local levels, the key is to get maximum performance from suppliers and maximum compliance from the member hospitals of the group," Simmons concluded.
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