HOSPITALS: Turning to the Internet for Purchasing
In the face of "stingy payments from Medicare and managed care companies," many hospitals are turning to the Internet to find solutions, the Wall Street Journal reports. A recent industry report indicated that of an estimated $83 billion that hospitals spend annually on supplies and equipment, $11 billion could be eliminated through "improved practices." Several companies have begun developing "electronic marketplaces for placing orders online and streamlining the supply chain." By linking up to an "electronic marketplace," a hospital can eliminate the "maze" between manufacturers and distributors and save money, Trevor Fetter, chair and CEO of the Tenet-backed venture Broadlane Inc., said. Broadlane will unveil its online system by the middle of the year. One of Broadlane's competitors, empactHealth.com, backed by Columbia/HCA, soon will be introduced at several hospitals in Richmond, Va., allowing them to order services and "nonstock items" not in their inventory. By the end of the second quarter, empactHealth expects to add a catalog of several hundred thousand medical/surgical supplies. With several companies competing for hospitals' business, a "shakeout will come."
Large Challenge, Few Winners
Chase analyst Stephen Fitzgibbons said, "There won't be a lot of winners longer term. Various players will pop up to solve specific problems, and a lot of these companies will end up coming together." In the meantime, hospitals are using online ordering systems to maintain consistency and to track their purchases. Michael Louviere, vice president of resource management at Baptist Memorial Health Care in Memphis, Tenn., said that "online ordering could help solve one of his biggest problems, which is to maintain a consistent price for the same item." He said, "We have hundreds and hundreds of different price schedules, and with that complexity comes errors. It's a constant battle to make sure we're getting the right price." Other institutions "crave better information about their buying patterns to help them eliminate unnecessary purchases, and to boost their volume discounts of preferred items" (Rundle, 2/28).