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Amazon’s Latest Ambition: To Be a Major Hospital Supplier

13 February 2018

From The Wall Street Journal:

Amazon.com Inc. is pushing to turn its nascent medical-supplies business into a major supplier to U.S. hospitals and outpatient clinics that could compete with incumbent distributors of items from gauze to hip implants.

Amazon has invited hospital executives to its Seattle headquarters on several occasions, most recently in late January, to solicit information about the sector and sound out ideas for expanding the company’s business-to-business marketplace, Amazon Business, into one where hospitals could shop to stock outpatient locations, operating suites and emergency rooms, according to hospital executives who attended the meetings.

Amazon Business already sells a limited selection of medical supplies—some sutures, for example, but not more specialized items like hip implants—as well as industrial and office supplies.

Amazon recently dispatched employees to a large Midwestern hospital system, where hospital officials are testing whether they can use Amazon Business to order health-care supplies for the hospital system’s roughly 150 outpatient facilities, according to a hospital official overseeing the efforts.

The pilot is customized for the hospital system’s catalog of supplies, the official said, allowing employees to compare prices the hospital negotiates with its distributors against those in the Amazon Business marketplace.

In response to questions about these efforts, Amazon said it is building technology to serve health-care customers, and seeking to sell hospitals on a “marketplace concept” that differs from typical hospital purchasing, which is conducted through contracts with distributors and manufacturers.

. . . .

Chris Holt, leader of global healthcare at Amazon Business, said Amazon won’t look to imitate established models already in the medical-distribution sector. “Our goal is to be something new,” he said. “We’ve been actively building out new capabilities and features,” to simplify purchasing, he said.

Echoing sentiments articulated by some in the industry, he said existing supply-chain options are dated and “not nearly as safe and secure” as needed. “We’re thinking about not how we can go mimic what’s already out there, but rather how we can rethink safety and security of anything clinical,” he said.

. . . .

Amazon’s comparison-shopping ethos could shake up the hospital- and clinic-supply business, where middlemen fees add costs and proprietary contracts obscure price differences. But Amazon also faces challenges.

So far, some hospitals have been reluctant to buy supplies from Amazon Business, for reasons including lack of options and lack of control over purchases and shipping, which hospitals closely safeguard to ensure prompt arrival of goods.

“We can’t be without supplies,” said Phyllis McCready, chief procurement officer for Northwell Health , one of the hospital executives who has attended the Seattle meetings with Amazon.

Hospitals typically contract for assurances that products will be available and delivered securely, she said. “It’s a little different than being out of a size 6 dress. I can’t be out of a six French catheter,” said Ms. McCready, who oversees the New Hyde Park, N.Y.-based hospital system’s $3 billion annual budget for supplies, contract services and pharmaceuticals.

Link to the rest at The Wall Street Journal

PG says even if he had no interest in Amazon as a bookseller and ebook innovator, it would still be a fascinating company to observe.

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