Amazon rocked the health care industry with its announcement last month that it would be collaborating on a new health care initative. Just when we thought the buzz was starting to die down, the company struck again, this time with a new target in mind: hospital supplies.
A Wall Street Journal report says the Internet retailer is aiming to become the go-to medical supply house not just for hospitals, but also for outpatient clinics, and it plans to dominate sales "from gauze to hip implants."
The company already offers some medical supplies, such as sutures, although it hasn't yet ventured into such areas as the aforementioned hip implants. Its Amazon Business marketplace also sells industrial and office supplies and has been courting hospital executives to sound them out about the needs and wants of the sector. It has even sent employees to a hospital system so that hospital staff can to test out health care supply ordering for the system's outpatient facilities—approximately 150 of them.
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According to a hospital official cited in the report, the pilot program is customized for the hospital system's catalog of supplies, which allows employees to compare prices the hospital negotiates with its distributors against those in the Amazon Business marketplace.
And Amazon isn't looking just to compete on price. As with its purchase of Whole Foods, it's looking to disrupt the entire distribution system within the sector. The report cites Chris Holt, leader of global healthcare at Amazon Business, saying that Amazon doesn't intend to mimic established models already in the medical-distribution sector. "Our goal is to be something new," he says in the report, adding that "We've been actively building out new capabilities and features" to make purchasing simpler.
And of course this isn't the company's first venture into health care, since its announced nonprofit venture together with JPMorgan Chase and Berkshire Hathaway aimed at cutting health care costs for all three firms. In addition, it's already been exploring the pharmacy services business, and has successfully received approval from several state pharmaceutical boards to become a wholesale distributor—something it has to do before being able to sell medical equipment to licensed professionals.
Not that there aren't concerns within the health care sector about such issues as continuity of supply and timely and secure delivery of goods. In addition, old habits die hard, with some providers saying they offer additional services to their customers that Amazon does not, or perhaps cannot, provide.
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