NEWS RELEASE

Novation’s July 2008 Budget Impact Projections Report Indicates
Significant Price Increases in Raw Materials

IRVING, TX; August 12, 2008 — Raw material costs are expected to increase across the supply chain, significantly impacting the purchasing decisions of health care providers, according to Novation’s July 2008 Budget Impact Projections Report. The supply-related budgeting trends study for the health care industry showed price increases in key commodities: paper, natural rubber, steel, cotton and food.

The report, published each January and July by Novation, the health care industry’s leading contracting services company, captures data from the U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) and Consumer Price Index (CPI), suppliers and raw materials resources. VHA Inc., University HealthSystem Consortium (UHC) and Provista, LLC members use the price projection information to assist in their supply-related budgeting processes and to more effectively manage supply costs.

Among its chief findings, Novation’s Budget Impact Projections Report July 2008 also found:

Oil and Gas
In July, the Energy Information Association projects that in 2009 the average barrel of gas will be $133. The same report, projects that retail diesel fuel prices will average $4.48 per gallon in 2009

Paper/Pulp
The two key reasons for the upward price pressures in the paper industry are lower supply to the level of demand and energy prices — pulp and paper production uses an enormous amount of natural gas and electricity.

Natural Rubber – centrifuged latex & plastic resins
Prices will remain high as a result of their direct link to the price of crude oil. Production is now being revived to higher levels with more trees being planted at a sizeable rate due to the profitability of higher prices. Weak demand for resins should keep prices steady and could possibly bring price decreases in late 2008 and 2009.

Steel
Prices continue to increase at a rapid rate attributable to high demand by developing countries, a weak U.S. dollar, higher energy cost, the global consolidation of the steel industry and unexpected plant shutdowns.

Aluminum and Copper
Healthy supply levels of aluminum have helped to keep increases minimal (6 percent in the last year), but prices may climb to 33 percent over the next two years. In addition, new copper production and good supply levels may help keep prices down. Prices have increased 13 percent in the last year and 54 percent in the last two years.

Cotton
Cotton is the primary raw material used in the manufacture of health care textiles. Over the past 12 months, cotton prices have increased by 33 percent – largely due to decreased supply as U.S. acreage is shifting from cotton to corn, crop failures in Brazil and political instability in Pakistan.

Food
Increased global demand for food and biofuels, and the higher cost of energy and fertilizers, will continue to pressure food prices. Experts expect supply levels of corn to be low in 2009, further raising prices. The price of corn directly affects meat, dairy, candy, soft drinks and products made from corn. However, wheat supply levels are anticipating a sharp increase, bringing downward pressure on prices.

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About Novation
Founded in 1998, Novation is the leading health care supply contracting company for more than 25,000 members of VHA Inc. and the University HealthSystem Consortium (UHC), two national health care alliances, and 5,500 members of Provista, LLC, representing 28,000 sites. Novation provides alliance members contract and price management and spend management services. Based in Irving, Texas, Novation develops and manages competitive contracts with more than 600 suppliers. VHA, UHC and Provista members used Novation contracts to purchased nearly $37.8 billion in 2009.

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