Exhibit 10 (m)
November 10, 1995
Mr. Hue Thomas III
Vice President
Owens & Minor, Inc.
The Innsbrook Corporate Center
4800 Cox Road
Glen Allen, VA 23060
Dear Hue,
Attached are the amendments to the Enhanced Authorized Distribution Agency
Agreement, dated as of November 16, 1993, which will be effective as on
November 1, 1995. In addition the affected Schedules will be replaced
and/or added effective November 1, 1995:
1) Schedule 1 Reflecting assigned health care organizations
2) Schedule 6 Base Cost + Plus Matrix
6A Payment Terms Outline
6B System Definition and Pricing
6BI System Definition Blended Worksheet
6C EOE/EDI Requirements
6D Initial Implementation Process
3) Schedule 7 ADA Utilization Acknowledgement Form
7A ADA Notification Form Changes to the Services
Menu
4) Schedule 8 Payment Terms Options
5) Schedule 12A Distribution and Pricing of Non-Traditional
Products
12B List of Non-Traditional Manufacturers and Products
6) Schedule 15 Service Menu
15A Service Menu Definitions
7) Schedule 20 ADA Responsibilities
8) Schedule 22A Service Requirements
22B Service Requirements Notification
In the past, VHA has developed action plans with ADA's to address issues of
non performance or breach of the ADA Agreement terms. VHA no longer
intends to utilize such an action plan process and will simply provide
notice of breach in accordance with Section 12 of the ADA Agreement.
Please sign the original of this letter to acknowledge your agreement and
acceptance of these
amendments and return the originals to my attention. If you have any
questions or need additional information please do not hesitate in
contacting me at your convenience.
Sincerely,
Larry Dooley
Senior Director, Distribution Services
cc: Bill Elliott
Richard Heard
AGREED and ACCEPTED as of this ______ day of November _______, 1995
Owens and Minor, Inc.
By:
Title:
Date:
NOVEMBER 1, 1995
AMENDMENT TO
ENHANCED AUTHORIZED DISTRIBUTION AGENCY AGREEMENT
DATED AS OF NOVEMBER 16, 1993
Replace Section 1 (7) in its entirety as follows:
(7) "Cost" refers to the lowest of (a) (in the case of a
Contract Product) the amount provided in the applicable
Purchasing Agreement as the price to be billed to the
Designated VHA Member and Affiliates without subtraction for
cash discounts allowed by Vendors for prompt payment and
prior to the addition of the Base Price Matrix, (b) ADA's
[this confidential information has been omitted and filed
separately with the Commission] in obtaining the products,
including actual inbound freight charges not paid or
credited by manufacturer and actually paid by ADA not
reflected on invoices from manufacturers, distributors or
others (such [this confidential information has been omitted
and filed separately with the Commission] shall be reduced
to reflect proportionately: [this confidential information
has been omitted and filed separately with the Commission]
and, except for (i) [this confidential information has been
omitted and filed separately with the Commission] allowed
and rebates paid or credited by vendors for prompt payment
and (ii) [this confidential information has been omitted and
filed separately with the Commission] provided by ADA to
Vendors, any and all value received by ADA or from which ADA
derives any direct or indirect benefit related in any way to
the product where ADA's cost affected), or (c) the net
distributor cost of any product pursuant to any agreement
between the Designated VHA Member or Affiliate and the
Vendor of such products. In addition to the foregoing,
after October 31, 1995, Cost for any product may be
increased by the amount equal to the decrease in prompt
payment or cash payment discount terms offered by a
manufacturer and actually taken on a consistent basis by
ADA.
In Section (6) (A) in the last sentence in Section (A) change
[this confidential information has been
omitted and filed separately with the
Commission] to [this confidential information
has been omitted and filed separately with
the Commission]
Delete Section (6) (A) (1) Initial Implementation: in its entirety
and replace with the following:
(1) Initial Implementation: See Schedule
6D for implementation process for new
Designated VHA Members or Affiliates
In Section (6) (A) (2) Annual Price Matrix Slotting; replace
"On or before April 1 of each year after 1994 during
the term of this Agreement"
with
"On or before July 1 of each year after 1995 during
the term of this Agreement"
NOVEMBER 1, 1995
AMENDMENT TO
ENHANCED AUTHORIZED DISTRIBUTION AGENCY AGREEMENT
DATED AS OF NOVEMBER 16, 1993
Delete Section (6) (A) (3) Quarterly Performance Bonus: in its
entirety with the following:
(3) Semiannual Performance Bonus:
Commencing with June 30, 1996, and for each six month
period thereafter, each Designated VHA Member or
Affiliate whose performance qualifies for a lower cost +
plus in the Price Matrix than its current Annual Slotting
will receive a Semiannual Performance Bonus from the ADA
within thirty (30) days after final sales figures are
available from the prior semiannual period in the form of
either a check or a credit to the account, at the
Designated VHA Member or Affiliate's election. The
amount of Semiannual Performance Bonus shall be
calculated by taking the difference between the cost +
plus percentage of the Designated VHA Member or
Affiliate's current Annual Slotting and the cost + plus
percentage applicable to the Designated VHA Member or
Affiliate's actual performance for the semiannual period
multiplied by the total amount of purchases through ADA
for that quarter. Semiannual Performance Bonus will not
be available for Hospitals who are on a fixed-fee-for-
service basis. In these cases, the Pricing Matrix will
be used for the purpose of determination of the VHA fee
only.
Replace Section 6 (A) (4) "Failure to Maintain Slotting: in its
entirety with the following:
(4) Failure to Maintain Slotting"
Any Designated VHA Member or Affiliate which fails to
maintain actual semiannual performance at least equal to
its current Annual Slotting for any semiannual period
shall have its Price Matrix location adjusted immediately
to reflect actual performance for the most recently
completed semiannual period.
NOVEMBER 1, 1995
AMENDMENT TO
ENHANCED AUTHORIZED DISTRIBUTION AGENCY AGREEMENT
DATED AS OF NOVEMBER 16, 1993
Replace Section 6 (E) Fill Rate, in its entirety with the
following:
(E) Fill Rate, ADA shall maintain for each Designated VHA
Member or Affiliate an unadjusted fill rate of 96% for
all "A" items. "A" items are defined as those items
that are stock items and are ordered by the Designated
VHA Member or Affiliate not less than two times per
month in accordance with the usage guidelines provided
in Schedule 22A.
ADA will provide to VHA Member or Affiliate by 2/1 of
each year commencing with 2/1/96 and each year after the
VHA Members or Affiliate's "A" items list and the ADA and
VHA Member or Affiliate will mutually agree to the "A"
list by 3/15 of same year.
ADA shall maintain for such Designated VHA Member or
Affiliate an unadjusted fill rate of 92% on all
"Formulary Items." "Formulary Items" are defined as
mutually agreed upon stock items ordered by Designated
VHA Members or Affiliates at least once per month (other
than "A" Items" and in accordance with usage guidelines
provided in Schedule 22A. needs to be provided to the
VHA Member or Affiliate by the ADA by 2/1/96 and each
year after and agreed to by the ADA and VHA Member of
Affiliate by 3/15 of same year.
Unadjusted fill rate shall be calculated by total number
of lines ordered fully delivered, divided by total number
of lines ordered.
NOVEMBER 1, 1995
AMENDMENT TO
ENHANCED AUTHORIZED DISTRIBUTION AGENCY AGREEMENT
DATED AS OF NOVEMBER 16, 1993
Replace Section 6 (J) Delivery of Non-Traditional Products, in its
entirety with the following:
(J) Delivery of Non-Traditional Products, See Schedule 12,
12A and 12B for additional terms of including Non-
Traditional Products. "The inclusion of Non-
Traditional Products if agreed to be distributed by
the ADA to a Designated VHA Member or Affiliate the
volume is mandatory and the price is determined as
follows:
- VHA Members or Affiliate's base cost + plus
+
- Mandatory Non-Traditional Service Fee of [this
confidential information has been omitted and filed
separately with the Commission]
+
- Service Matrix Fees (if applicable)
=
- Effected Cost + Plus
+
- Actual inbound freight if not paid by manufacturer
The Non-Traditional Product List is in Schedule 12B, Each
ADA must provide a list of Non-Traditional Manufacturer's
and their products.
Each month a separate line item report due on the 10th
with all other reports, ADA shall provide to VHA and VHA
Member or Affiliate with the following detail:
- Manufacturer Name
- Product Name and Description
- Price Charged to VHA Member or Affiliate
- How price was derived to VHA Member or
Affiliate
See Schedule 12, 12A and 12B for Delivery of Non-
Traditional Products
NOVEMBER 1, 1995
AMENDMENT TO
ENHANCED AUTHORIZED DISTRIBUTION AGENCY AGREEMENT
DATED AS OF NOVEMBER 16, 1993
Add a new Section 6 (M) as follows:
(M) ADA Service Responsibilities as set forth in Schedule
22, lists the responsibilities of the ADA and the
requirements of the Designated VHA Member of
Affiliate, with Penalties and rewards for the ADA upon
failure to perform or for exceeding service
responsibilities expectation.
Replace Section (7) (B) Patient Charge-Item Labelling, in its
entirety with the following:
(B) Patient Charge Labelling ADA shall charge [this
confidential information has been omitted and filed
separately with the Commission] per label regardless
who supplies the label.
In Section 7 (E) Emergency Deliveries, at the end of the
paragraph add the following:
"ADA may charge [this confidential information has
been omitted and filed separately with the Commission]
for providing product for emergency deliveries"
In Section 7 (F) Barcoding, at the end of the paragraph add
the following:
"ADA may charge [this confidential information has
been omitted and filed separately with the Commission]
it occurs in providing Barcoding labels"
In Section 11 (R) Favored Customer Pricing, at the end of the
paragraph add the following:
"Upon written request by VHA, each ADA shall provide
written verification that the terms and conditions of
the ADA Agreement, and in particular the cost + plus
and service matrix pricing, provides value to VHA
Members of Affiliates no less than the lowest price
and greatest value offered by ADA to any other
customer other than the government. As competitive
situations arise during the term of this Agreement, it
will be necessary for VHA and ADA to mutually agree on
meeting specific competitive situations that are
strategically important to VHA and ADA, in particular
with regards to Designated VHA Members or Affiliates
request for proposal (RFP), VHA and ADA mutually agree
to notify each other within five (5) business days
upon receipt of RFP from Designated VHA Member or
Affiliate and ADA agrees that any response to the RFP
shall be in the context of and pursuant to the terms
of this Agreement.
SCHEDULE 1
DESIGNATED VHA MEMBERS AND AFFILIATES
[List of Members and Affiliates assigned to ADA]
SCHEDULE 6
COST-PLUS MATRIX
(Medical/Surgical Distribution)
Monthly $ Volume of Purchases
Utilization 0- 150,001- 400,001- 750,001-
150,000 400,000 750,000 And >
31- [*] [*] [*] [*]
84%
85-
100% [*] [*] [*] [*]
All Health Care Organizations participating at or below 30%
utilization will be charged cost + [this confidential information has
been omitted and filed separately with the Commission] notwithstanding
performance for monthly volume.
* [This confidential information has been omitted and filed separately
with the Commission.]
SCHEDULE 6A
PAYMENT TERMS OUTLINE
Payment Terms
[*]-Day Prepay: [*] Credit
Net [*] Days: [*] Credit
Standard Terms: [*] purchases due [*]
[*] purchases due [*]
Net [*] Days: Add [*]
Net [*] Days: Add [*]
Net [*] Days: Add [*]
Over [*] Days: Add additional [*] for
each 15 days beyond
[*] days
No Designated VHA Member or Affiliate can be put on credit hold by
their ADA without the ADA notifying in writing the Designated VHA
Member or Affiliate and VHA fifteen (15) days prior to credit hold.
VHA and ADA will work collectively to remedy the issue with the
Designated VHA Member or Affiliate prior to loss of credit privileges.
If credit privileges are rescinded to the Designated VHA Member or
Affiliate, the Designated Member or Affiliate may be entitled to a
C.O.D. relationship with their ADA.
Days Sales Outstanding ("DSO") is reviewed quarterly and all
adjustments to the base cost+plus will be made prospectively on a
quarterly basis. DSO is based on the previous quarter's actual
quarterly DSO average. No Designated VHA Member or Affiliate will be
assessed to a higher DSO charge if the disputed portion of an invoice
is not paid due to invoice discrepancies. All invoice discrepancies
noted by the Designated VHA Member or Affiliate must be brought to the
attention of the ADA by the Designated VHA Member or Affiliate within
three (3) business days of receipt of invoice.
A service charge is due at a monthly rate of the lesser of 1.5% (18%
annual) or the maximum legally allowable rate by state/local law on
all invoices not paid within the agreed upon payment terms.
* [This confidential information has been omitted and filed separately
with the Commission.]
SCHEDULE 6B
SYSTEM DEFINITION PRICING
The following system definitions and pricing scenarios are for acute-
care systems. Systems cannot add their other health-care provider sites'
utilization and volume into the pricing equation. Designated VHA Members
or Affiliates that are not part of a system as defined below will otherwise
be slotted pursuant to the Agreement.
(1) If a VHA Shareholder/Partner controls (owns, manages or leases)
the related VHA institutions in its system and the system has a
minimum utilization of [this confidential information has been
omitted and filed separately with the Commission] , and if the
system offers centralized ordering and billing, the system may
combine its utilization and dollar volume as long as it meets the
minimum stated above and may be slotted according to its actual
combined utilization and volume.
The system will be entitled to [this confidential information has
been omitted and filed separately with the Commission] deliveries
per week to each institution up to a maximum of [this
confidential information has been omitted and filed separately
with the Commission] per week per system. All other deliveries
will be charged as per the service menu. All other service fees
will be charged according to the system's actual combined
utilization and volume slot. Delivery sites of the system that
are further than one hundred (100) miles from the ADA branch will
pay a [this confidential information has been omitted and filed
separately with the Commission] per-mile, one-way surcharge on
all deliveries.
(2) If a VHA Shareholder/Partner controls (owns, manages or leases)
the related VHA institutions in its system and the system has a
combined minimum utilization of [this confidential information
has been omitted and filed separately with the Commission], and
if the system does not offer centralized ordering and billing,
then the system may be slotted by its combined utilization and
dollar volume; however, the system will add a [this confidential
information has been omitted and filed separately with the
Commission] charge to its combined base matrix slot if it does
not have centralized ordering and [this confidential information
has been omitted and filed separately with the Commission] if it
does not have centralized billing, for all institutions in the
system.
The system will be entitled to [this confidential information has
been omitted and filed separately with the Commission] deliveries
per week to each institution up to a maximum of [this
confidential information has been omitted and filed separately
with the Commission] per week per system. All other deliveries
will be charged according to the service menu. All other service
fees will be charged according to the system's combined actual
slotted position. Delivery sites of the system that are further
than one hundred (100) miles from the ADA branch will pay a [this
confidential information has been omitted and filed separately
with the Commission] per-mile, one-way surcharge on all
deliveries.
(3) If a VHA Shareholder/Partner does not control (own, manage or
lease) the related VHA institutions, then the system cannot
combine its utilization and dollar volume to be slotted.
However, it may blend its utilization and volume to be slotted.
Blended slotting occurs by each VHA health-care organization
("HCO") in the system being slotted by its own utilization and
dollar volume. Then the base matrix mark up for each VHA HCO is
averaged together on a weighted basis to give the system its
actual slot. If the system does not offer centralized ordering,
it must add [this confidential information has been omitted and
filed separately with the Commission] to its base cost+plus slot;
and if it does not have centralized billing, then the system will
add a [this confidential information has been omitted and filed
separately with the Commission] onto its base cost+plus slot.
The system will receive [this confidential information has been
omitted and filed separately with the Commission] deliveries per
week to each organization up to a maximum of [this confidential
information has been omitted and filed separately with the
Commission] per week per system. All other deliveries will be
charged according to the service menu. All other service
charges will be based on the individual organization's pre-
blended base matrix mark up. All Delivery sites that are further
than one hundred (100) miles from the ADA branch will pay a [this
confidential information has been omitted and filed separately
with the Commission] per-mile, one-way surcharge on all
deliveries.
(4) For free-standing VHA HCOs or systems that need to develop a
different type of relationship with their ADA partners, the VHA
HCO, ADA and VHA will work together to develop the relationship
outside of the existing matrix concept. This process will be in
lieu of the "Distribution Supply Chain Containment Program" that
was on the base matrix. Examples of this are Fee-For-Service
Programs and Activity-Based Costing Programs. No ADA can enter
into an off-matrix program without prior approval from VHA.
SCHEDULE 6B1
MED/SURG ADA SYSTEM BLENDING FEE WORKSHEET
SYSTEM NAME:______________________________________________________________
(1) (2) (3) (4) (5) (6) (7) (8)
MONTHLY
MONTHLY BASE DISTRIBUTION
FACILITY NAME CITY VOLUME DSO EOE UTILIZATION COST PLUS CHARGE [*]
CENTRALIZED ORDERING? IF NO, ADD [*]. CENTRALIZED BILLING? IF NO, ADD [*]
DIVIDE TOTAL FOR COLUMN (7) ________________________ BY TOTAL FOR COLUMN (3)
____________________________. THE RESULT IS THE BLENDED COST+PLUS
__________________ PLUS ADDED CHARGES FOR CENTRALIZED ORDERING AND BILLING
__________________. THE RESULT IS THE SYSTEM MONTHLY BLENDED COST+PLUS OF
___________________.
Affiliates which are located further than 100 miles from the ADA branch will
incur a [*] per-mile surcharge on all deliveries. Monthly volume, DSO, EOE and
utilization will be reviewed quarterly.
* [This confidential information has been omitted and filed separately with
the Commission.]
SCHEDULE 6C
EOE/EDI REQUIREMENTS
EOE: All Designated VHA Members or Affiliates must be at [this
confidential information has been omitted and filed separately
with the Commission] electronic order entry ("EOE") for all their
orders. EOE is calculated as number of lines ordered by EOE,
divided by number of lines ordered. If the Designated VHA Member
or Affiliate is not at [this confidential information has been
omitted and filed separately with the Commission], the following
charges will be added to the Designated VHA Member or Affiliate's
base cost+plus:
- EOE [*] [*] add-on to base
cost+plus
- EOE [*] [*] add-on to base
cost+plus
EOE is reviewed quarterly and is determined by the previous
quarterly average.
EDI: Effective July 1, 1996, all Designated VHA Members and Affiliates
will be required to use the following EDI transaction sets:
- Electronic Invoices (810)
- Electronic Fund Transfer (820 and 823)
- Electronic Price Catalog (832)
For each of the above three EDI transaction sets that the
Designated VHA Member or Affiliate does not perform, a [this
confidential information has been omitted and filed separately
with the Commission] charge will be added to the base cost+plus
for each of the EDI transaction sets up to a total of [this
confidential information has been omitted and filed separately
with the Commission]. This will be measured on a quarterly basis
and calculated based on the previous quarterly averages for the
three transaction sets. A 95% quarterly average must be
maintained on all three transaction sets.
*[This confidential information has been omitted and filed separately with
the Commission].
SCHEDULE 6D
REVISED INITIAL IMPLEMENTATION
Each Designated VHA Member or Affiliate will go through a revised
initial implementation process, outlined as follows:
1) Each ADA will report the following information to VHA for each
Designated VHA Member or Affiliate:
a) hospital name/LIC #
b) complete address
c) utilization based on Distributor Profile Form on file with
VHA (1995)
d) volume
e) current slot from original base cost+plus matrix
f) current EOE (Electronic Order Entry)
g) current DSO (Days Sales Outstanding) exclusive of invoices
that are in discrepancy
h) number of deliveries and current charge if over two per week
i) complete list of other distribution services and the current
charges for those services
j) current total cost+plus price inclusive of base, EOE, DSO
and additional services
k) new base cost+plus matrix price as determined by revised
base cost+plus matrix in Schedule 6
l) total new cost+plus inclusive of all add-on fees
2) VHA, upon receipt of Designated VHA Member or Affiliate
information, will verify information for accuracy and make any
necessary changes per the revised Enhanced ADA Agreement.
3) VHA, upon completion of each Designated VHA Member or Affiliate's
information, will send out a re-launch package that will provide
each Designated VHA Member or Affiliate with all the details on
how the Designated VHA Member or Affiliate's distribution service
costs were determined.
4) VHA will, upon revision of Designated VHA Member or Affiliate's
distribution cost structure, notify the Designated VHA Member or
Affiliate's ADA, who will immediately load the revised Designated
VHA Member or Affiliate's distribution cost structure into the
ADA's systems and prepare revised price books that will be
inclusive of all changes that the revised Enhanced ADA Agreement
contains.
5) Revised distribution cost structure for each Designated VHA
Member and Affiliate will go into effect on December 1, 1995.
6) Any new Designated VHA Member or Affiliate that joins VHA or the
medical-surgical ADA program after the completion of the roll out
of the revised Enhanced ADA Agreement will follow the steps as
outlined here:
a) If the Designated VHA Member or Affiliate is currently using
its declared ADA partner, the Designated VHA Member or
Affiliate will follow steps 1-5 as outlined in the revised
initial implementation process.
b) If the Designated VHA Member or Affiliate is not currently
using its declared ADA partner, then it must follow these
steps:
(1) declare an ADA partner from the ADAs that serve the
Designated VHA Member or Affiliate's marketplace
(2) complete a Distributor Profile Form and return it to VHA
(3) complete a Utilization Acknowledgment Form
(4) follow steps 2-5 of the revised initial implementation
process
c) Any requests for variation to the steps outlined in the
revised initial implementation need to be reviewed and
approved by VHA.
SCHEDULE 7
MED/SURG ADA UTILIZATION ACKNOWLEDGMENT FORM
HOSPITAL:
LIC #
City: ST
Declared ADA:
Branch/DC:
HCO PURCHASING INFORMATION
Annualized Total Distribution:
Annualized 3rd Quarter through ADA:
Monthly Volume:
HCO Base Cost Plus: Utilization Percentage:
3rd QTR DSO: Days 3rd QTR DSO Charge:
3rd QTR EOE: 3rd QTR EOE Charge:
HCO SERVICE MENU INFORMATION
Service Menu Fee Charge
Customized Invoices:
Customized Packing Slip:
Combined Packing Slip and Invoice:
Custom Pallet Architecture-Basic:
Custom Pallet Architecture-Expanded:
Extra Weekly Deliveries (each):
Bulk Picked by Department, Delivered to Dock:
LUM Picked by Department, Delivered to Dock*:
LUM Picked by Department, Delivered to Dept*:
LUM Picked by Department, Put Away*:
Total Service Menu Fees:
TOTAL HCO COST PLUS FEE: *cumulative services, applied to affected sale
SCHEDULE 7A
ADA NOTIFICATION FORM: CHANGES TO THE SERVICE MENU
HCO COST PLUS FEE INFORMATION Current Slotting Information New Slotting Information
ACTUAL COST PLUS FEE ACTUAL COST PLUS FEE
Cost Plus Customized YES or NO [*] YES or NO [*]
Service Menu Invoices
Options:
Customized YES or NO [*] YES or NO [*]
Packing Slips
Combined YES or NO [*] YES or NO [*]
Packing/Invoice
Custom Pallet YES or NO [*] YES or NO [*]
Architecture-
Basic
Custom Pallet YES or NO [*] YES or NO [*]
Architecture-
Expanded
Extra Weekly YES or NO YES or NO
Deliveries (.25%)
Bulk pick/dept., YES or NO [*] YES or NO [*]
dlvr/dock
*cumulative LUM pick/dept., YES or NO [*] YES or NO [*]
(applies to dlvr/dock*
affected sales)
LUM pick/dept., YES or NO [*] YES or NO [*]
dlvr/dock*
LUM pick/dept., YES or NO [*] YES or NO [*]
put away*
% %
TOTAL SERVICE MENU
COST PLUS FEES
ADDITIONAL SERVICES BILLED SEPARATELY BY ADA
Affix Patient Charge Labels @ [*] per label
Bar Coded Shelf Labels @ [*]
Emergency Delivery @ [*]
Line Charge of [*] per line, if average order is less than [*] per line
Note: All of the above charges are in addition to the base pricing matrix
charges.
Health Care Organization VHA - System Services
ADA VHA - Distribution Services
* [This confidential information has been omitted and filed separately with
the Commission.]
SCHEDULE 8
PAYMENT TERMS OPTIONS
ADA shall invoice each Designated VHA Member and Affiliate once each
month, unless more frequent invoices are requested by Designated VHA Member
or Affiliate. Each Designated VHA Member or Affiliate shall select from the
following payment options (all deductions or additions are made to the
annual slotting locations on the price matrix for that Designated VHA
Member or Affiliate):
_______ [*]-day prepay: [*] credit
_______ Net [*] days: [*] credit
_______ Standard terms: [*] purchases due [*]
[*] purchases due [*]
_______ Net [*] days: Add [*]
_______ Net [*] days: Add [*]
_______ Net [*] days: Add [*]
_______ Over [*] days: Add additional [*] for each 15 days
beyond [*] days
All invoice terms run from the date of invoice. Credit for prepay
shall be no more than the percent of the amount on deposit with ADA, not
the percent of the total monthly/quarterly purchases.
Taxes, where applicable, will be added to the invoice price of
products.
No Designated VHA Member or Affiliate can be put on credit hold by
their ADA without the ADA notifying the Designated VHA Member or Affiliate
and VHA in writing fifteen (15) days prior to credit hold. VHA and the ADA
will work collectively to remedy the issue with the Designated VHA Member
or Affiliate prior to loss of credit privileges. If credit privileges are
rescinded to the Designated VHA Member or Affiliate, then the Designated
VHA Member or Affiliate is entitled to continue to purchase their products
and services from the ADA on a C.O.D. basis.
DSO is reviewed quarterly, and all adjustments to the base cost+plus
will be made only on a quarterly basis. The DSO will be determined by the
previous quarter's average DSO, excluding any disputed portions of invoices
noted by the Designated VHA Member or Affiliate as in discrepancy. No
Designated VHA Member or Affiliate will be charged a higher cost+plus for
DSO due to invoices that are in discrepancy. All invoice discrepancies need
to be reported to the ADA by the Designated VHA Member or Affiliate within
three (3) business days of receipt of the invoice.
A service charge may be added by the ADA to the Designated VHA Member
or Affiliate's monthly outstanding balance of the lesser of 1.5% (18%
annually) or the maximum legally allowable rate by local law, on all
invoices not paid within the agreed-upon payment terms.
*[This confidential information has been omitted and filed separately with
the Commission.]
SCHEDULE 12A
DISTRIBUTION OF NON-TRADITIONAL PRODUCTS
When ADAs are requested to distribute Non-traditional Products for the
Designated VHA Member or Affiliate, the process for distributing these
Products is as follows:
1) The Designated VHA Member or Affiliate requests the ADA to
distribute a Non-traditional Product.
2) The ADA and Non-traditional Product manufacturer agree to put the
Non-traditional Product through distribution.
3) If the ADA agrees to distribute the Non-traditional Product, the
process for pricing the Non-traditional Product will be as
follows:
a) Non-traditional Product volume is added to Price Matrix.
b) Non-traditional Product assumes the Designated VHA Member or
Affiliate's base cost+plus.
c) A Non-traditional Product service charge of [this
confidential information has been omitted and filed
separately with the Commission] is added to the base
cost+plus.
d) All applicable service fees are added.
e) Actual inbound freight is added, if not prepaid by
manufacturer.
4) The ADA must provide a list of Non-traditional Product
manufacturers and their products, product descriptions and prices
charged to each Designated VHA Member or Affiliate and how the
prices were determined.
5) Each month, the ADA must provide VHA with a line-item-detail
report on all Non-traditional Products sold and prices charged to
each Designated VHA Member or Affiliate.
6) A list of Non-traditional Product manufacturers and Products is
in Schedule 12B.
7) VHA determines that Non-traditional Products are those products
of which sixty percent (60) of the products are sold on a direct
basis from the manufacturer to the Designated VHA Member or
Affiliate.
SCHEDULE 12B
NON-TRADITIONAL PRODUCT MANUFACTURERS AND PRODUCTS
[This list will be sent to each VHA organization at a later date.]
SCHEDULE 15
SERVICE MENU
SERVICE CHARGE
Customized Invoices [*]
Customized Packing Slip [*]
Combined Packing Slip and Invoice [*]
Custom Pallet Architecture, Basic [*]
Custom Pallet Architecture, Expanded [*]
Extra Weekly Deliveries [*] per extra delivery
Bulk Picked by Department, Delivered to [*]
Dock
LUM Picked by Department, Delivered to [*]
Dock*
LUM Picked by Department, Delivered to [*]
Dept*
LUM Picked by Department, Put Away* [*]
Affix Patient Charge Labels [*] per label
Bar Coded Shelf Labels [*]
Emergency Delivery [*]
Line Charge [*] per line, if average line
order is less than [*] per line
NOTE: Service charges can be included in the HCO's base cost+plus or billed as
a separate line item or invoice.
*[This confidential information has been omitted and filed separately with the
Commission.]
SCHEDULE 15A
CUSTOM PALLET ARCHITECTURE
Custom pallet architecture is separated into two types of services:
basic and expanded. The defined activities included under these two
services are:
CUSTOM PALLET ARCHITECTURE BASIC
- items separated on pallet by department or purchase order
- items arranged in purchase order input sequence
CUSTOM PALLET ARCHITECTURE EXPANDED
- items palletized in reverse storeroom location
- separate pallet for each department
- separate pallet for non-stock items
- separate pallet for stock items
- pallet clearly marked with description and internal routing
information
The following services are provided free of charge and are not
included in custom pallet architecture:
- box/case labels facing out on pallet
- shrink-wrapped pallets
- pallets arranged to meet HCO weight and/or dimension
requirements
SCHEDULE 20
PRODUCTS ON WHICH NO VHA FEE IS DUE
1. All VHA PLUS(R) products
2. Abbott I.V. solutions and sets, if distributed by the ADA
SCHEDULE 22A
ADA SERVICE LEVELS AND RESPONSIBILITIES
SERVICE ADA PERFORMANCE VHA HCO ADA PENALTY FOR ADA REWARD FOR
RESPONSIBILITY REQUIREMENTS PERFORMANCE FAILURE TO MEET EXCEEDING
REQUIREMENTS PERFORMANCE PERFORMANCE
REQUIREMENTS REQUIREMENTS
1) FILL RATES 1) "A" LIST 96% FILL 1) "A" LIST 96% FILL 1) "A" LIST 96% FILL 1) "A" LIST FILL 96% FILL
a) ADA needs to a) Needs to be a) 1 point 94.0 - 95.5% a) 1 point 96.1 - 97.5%
provide "A" approved by
list by 2/1 of Designated VHA b) 2 points 92.0 - 93.5% b) 2 points
each year. Member or Affiliate (greater than) 98.0%
by 3/15 of each year. c) 3 points (less than)91.5%
b) ADA needs to b) All usage for new d) ADA will reimburse
provide Designated products or changes Designated VHA member
VHA Member or to current products or Affiliate for every
Affiliate with fill must be provided to product from "A" List
report by 15th of ADA 30 days in that the Designated
each month. advance. VHA Member or Affiliate
needs to purchase from
c) ADA is responsible c) All usage provided alternative sources, to
for keeping the must be within 10%(+-) include product price and
List current. of actual usage. distribution service costs
of different than purchased
d) "A" Items are those d) If "A" List is not from ADA.
that Designated VHA provided to ADA by
Member or Affiliate 3/15, Designated VHA
and ADA mutually agree Member or Affiliate
upon; "A" items are needs to notify VHA.
defined as those items
that are stock items e) All product numbers
and are ordered by the must be provided to
Designated VHA Member ADA at time of order.
or Affiliate not less
than two times per f) All orders need to
month. include correct
product numbers.
e) Measured lines ordered
vs. lines filled g) All orders must be placed
(unadjusted). prior to normal orde
cutoff time as communicated
f) Measured on a monthly by local ADA branch to the
average. Designated VHA Member or
Affiliate.
ADA PERFORMANCE VHA HCO PERFORMANCE ADA PENALTY FOR FAILURE ADA REWARD FOR
SERVICE RESPONSIBILITY REQUIREMENTS REQUIREMENTS TO MEET PERFORMANCE EXCEEDING
REQUIREMENTS PERFORMANCE
REQUIREMENTS
2) FORMULARY ITEM FILL 2) FORMULARY ITEM FILL 2) FORMULARY ITEM FILL 2) FORMULARY ITEM FILL 2) FORMULARY ITEM FILL
a) 92% Fill on a) Needs to be a) 1 point 90 - 91.5% a) 1 point 92.5 -
Formulary Items approved by 94.0%
Designated VHA b) 2 points 88 - 89.5%
b) Fill will be Member or Affiliate b) 2 points
measured monthly by 3/15 of each c) 3 points (greater than)
based on lines year. (less than) 87.5% 94.0%
ordered vs. lines
fill (unadjusted) b) All usage for new
products, additional
c) ADA responsible products or changes
for keeping the to existing products
Formulary Items must be submitted
current. 30 days in advance
with usage 10%(+-).
d) Formulary Items
are defined as c) Designated VHA Member
mutually agreed or Affiliate must notify
upon stock items VHA by 3/15 if list has
that the Designated not been received to
VHA Member or accepted.
Affiliate orders
at least once per d) All product numbers
month (other than must be provided to
"A" Items). ADA at the time of
order.
e) All orders need to
include correct product
numbers.
f) All orders need to be
placed prior to normal
ADA branch cutoff times
as provided to Designated
VHA Member or Affiliate by
ADA branch.
SERVICE ADA PERFORMANCE VHA HCO ADA PENALTY FOR ADA REWARD FOR
RESPONSIBILITY REQUIREMENTS PERFORMANCE FAILURE TO MEET EXCEEDING
REQUIREMENTS PERFORMANCE PERFORMANCE
REQUIREMENTS REQUIREMENTS
3) INVOICE ACCURACY 3) INVOICE ACCURACY 3) INVOICE ACCURACY 3) INVOICE ACCURACY 3) INVOICE ACCURACY
a) 98% of all a) Designated VHA a) 1 point 96 - 97.5% a) 1 point 98.5 -
invoices (100% Member or Affiliate 99.0%
after 810 and 832 needs to provide b) 2 points 94.5 - 96.0%
go into effect). to ADA with correct b) 2 points 99.1 -
information 30 days c) 3 points (less than) 100%
b) Measured on a in advance on all 94.0%
monthly average non-contract product
of line items pricing.
ordered versus
line items invoiced b) All product numbers
correctly. must be provided to
ADA at time of order.
c) All orders need to
include the correct
product numbers.
d) All orders need to be
placed prior to normal
ADA branch cutoff time.
Normal ADA branch cutoff
time needs to be provided
to Designated VHA Member
or Affiliate by ADA branch.
SERVICE ADA PERFORMANCE VHA HCO ADA PENALTY FOR ADA REWARD FOR
RESPONSIBILITY REQUIREMENTS PERFORMANCE FAILURE TO MEET EXCEEDING
REQUIREMENTS PERFORMANCE PERFORMANCE
REQUIREMENTS REQUIREMENTS
4) PICKING ERRORS 4) PICKING ERRORS 4) PICKING ERRORS 4) PICKING ERRORS 4) PICKING ERRORS
a) 98% of all orders a) Designated VHA a) 1 point 96 - 97.5% a) 1 point 98.1
received. Member or Affiliate - 99.0%
needs to provide b) 2 points 94.5 - 95.5%
b) Measured monthly product numbers at b) 2 points 99.1
based on line items time of order. c) 3 points (less than) - 100%
ordered versus line 94.4%
items picked b) All orders need to
correctly. provide correct
product numbers.
c) Designated VHA Member
or Affiliate needs to
report to ADA by end
of same business day
order errors, and ADA
cannot take orders into
system prior to product
numbers being received.
d) All orders must be placed
prior to normal ADA branch
cutoff time. ADA branch needs
to provide to Designated
VHA Member or Affiliate the
order cutoff time.
The point system works as follows:
1) Each point is worth [this confidential information has been omitted and
filed separately withthe Commission]; points are not rolled from month
to month.
2) Measurement is as follows:
a) "A" Fill Rate is measured on monthly average.
b) "Formulary Fill Rate" is measured on monthly average.
c) Invoice Accuracy is measured as a monthly average of line items
ordered versus line items invoiced correctly.
d) Picking Errors are measured as a monthly average of line items ordered
versus line items picked correctly.
3) Each Category is measured on its own merit.
4) Invoice Accuracy and Picking Errors measurements begin on 12/1/95.
5) "A" and Formulary Item Fill Rate measurement will begin based on time
line established in Schedule 22A.
SCHEDULE 22B
ADA Service Responsibilities
Penalty Notification
HEALTH CARE ORGANIZATION ________________________________________________
CITY, STATE ________________________________________________
ADA PARTNER ________________________________________________
ADA BRANCH/DC ________________________________________________
This serves as official 30-day notification that the HCO intends to monitor the
ADA under Schedule 22 of the VHA ADA agreement for service responsibilities.
Specifically, the HCO is concerned with the following service responsibility
criteria (check all that apply):
__________ "A" Item Fill Rate
__________ Formulary Fill Rate
__________ Invoice Accuracy
__________ Picking Errors
The ADA partner will be accountable to the HCO for the service penalties
outlined in Schedule 22A beginning the first month after the 30-day
notification.
__________________________________________________________ ________________
Health Care Organization Date
________________________________
Effective Date