Rather than fear Amazon, at least some hospitals and health systems apparently would welcome the world’s biggest online retailer getting deeper into healthcare. At least for using Amazon Marketplace to buy more medical supplies.
A new survey of 152 hospital CEOs, materials managers and related executives with supply chain, e-commerce and procurement responsibilities finds that 59% regularly hear news that Amazon wants to take on more healthcare business. 62% of survey respondents also would welcome Amazon selling medical supplies on Amazon.com and on its marketplace.
“Amazon is seeking to disrupt the traditional healthcare supply chain by selling everything from bandages to hip replacements to syringes,” says Jeremy Bikman, CEO of Reaction Data, a healthcare research firm that conducted the survey. “They plan to expand their B2B marketplace to allow hospitals and clinics to shop for supplies they need to stock various departments and locations.”
Amazon has yet to say if it will sell directly to hospitals—although published reports say Amazon has been in talks with various unnamed health systems for several months about the feasibility of more hospitals buying medical supplies from the Amazon marketplace. Today, Amazon has more than two dozen medical supplies categories on Amazon.com, although it’s not clear how many SKUs it carries in its own inventory and on its marketplace from various third-party sellers.
But the categories are extensive, ranging from suture thread and stethoscopes to wheelchairs and over-bed tables, and 75% of hospital executives believe Amazon would be “highly successful” in selling to hospitals. “It (Amazon) would extend the advantage of their consumer site to hospital systems, including lower costs, simplified purchasing and getting rid of middlemen,” Bikman says. “Amazon has already met with major hospital executives and even rolled out a program with a large hospital system to stock dozens of outpatient facilities with a customized catalog of supplies.”
Hospital purchasing managers taking part in the survey want Amazon to focus primarily on “commodities” such as plastic disposable gloves and gauze and to a lesser extent on surgical, pharmaceutical, intravenous, diabetic and orthopedic supplies. “Half of respondents recommend that Amazon stick to its strength of providing commodities,” Bikman says. “That said, there is a lot of interest in everything from surgical supplies to catheters.”
Hospital procurement programs and supply chains are extremely complex and typically include at least 20 major segments, ranging from product distributors and wholesalers to specialized drug makers. Hospital also have very complex purchasing procedures and hard and recurring delivery deadlines.
If Amazon does want to sell more diverse and a larger volume of medical supplies to hospitals, there is little room for error, the survey says. Even with Amazon’s vaunted customer service via programs such as Amazon Prime, the biggest online retailers can’t afford late or missed deliveries.
“There are concerns that the products may not be up to the same specifications, and Amazon won’t be able to keep the supply consistent with the direct contract model that most provider organizations currently use,” Bikman says. “Simply put, hospitals don’t have the luxury of running out of stock, which is why they typically contract directly with distributors and manufacturers.”
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