Earlier this month AmeriNet, a purchasing group for more than 1,900 hospitals, took the bold step of inviting a pair of Internet companies-the new kids on the buying block-to debate the implications of the World Wide Web in front of about 500 supplier sales representatives.
Karl Brother, a vice president of sales and development at Providence, R.I.-based Vector, an AmeriNet shareholder, moderated the gutsy Internet panel, kicking off with the question on the minds of nearly everyone in the healthcare supply chain: What is it going to do for us and to us?
For AmeriNet and other group purchasing organizations, the Internet poses paradoxical opportunities. Browser software promises to eliminate the computer Babel that has thwarted paperless purchasing thus far. Democratic by design, the Internet empowers buyers, wherever they may be, with up-to-the-second information and the ability to do business instantaneously with any vendor outfitted for the information age. Soon the Internet will pay off, advocates say, through more-efficient pricing, ordering, billing and tracking of supplies-benefits to customers and sellers alike.
This purchasing freedom could threaten groups and other traditional intermediaries for supply purchasing, however. Will buyers and sellers come to terms directly in the online marketplace and cut out middlemen altogether?
Or will an alternative view prevail, one in which the Internet speeds existing purchasing methods without displacing groups and other middlemen?
Nobody at the AmeriNet meeting in St. Louis, where the company is based, purported to have definitive answers. But everyone agreed it's only a matter of time-a short time-before a clearer purchasing picture emerges in cyberspace.
"Groups must recognize and admit that this isn't a passing fad," said Todd Ebert, executive vice president at AmeriNet. The Internet is evolving swiftly, and so should the groups, he said. "This is real."
As a cautionary tale, Ebert pointed to the sorry performance of the venerable Encyclopedia Britannica. Sales of the shelf-bending reference books have dropped by half since 1993, because the publisher failed to adapt to changing technology, such as computers outfitted with CD-ROMs, which gave competitors a new, economical way to reach customers who were more open to change than almost anyone expected.
Ebert marveled at how quickly the new economics of the computer age can "kill a sales force, a supreme brand and the world's best content."
Executives from two of the most prominent Internet healthcare start-ups appeared eager to soothe the nerves of their hosts and members of the audience, however.
Yes, the Internet is here to stay, they said, but so are the purchasing groups.
David Roesler, vice president of business development at Neoforma.com, Santa Clara, Calif., declared that his company would not get involved in determining the prices of supplies, for instance.
Internet purchasing, as Neoforma envisions it, is not a "price machine taking another penny off products," he said.
Prices are now and will remain the domain of purchasing groups, he explained. Instead, Neoforma aims to be a "switch," or clearinghouse, through which product information and buying traffic passes.
Charles Smith, president of Medibuy.com, La Mesa, Calif., predicted the Internet would bring "major changes" to healthcare purchasing but that the transformation might take longer than some people think. "It's not something that you learn and embrace overnight," he said. Ultimately, he expects that Medibuy, for one, will bring the "dynamics of (electronic) transactions to healthcare in a disciplined way."
Rather than supplanting the groups, or other intermediaries, Medibuy would support users with a single purchasing portal, or entryway, to the Internet bazaar.
Buyers, according to Smith, want flexible tools that provide information and easy buying access, whether through group contracts or directly with manufacturers or distributors for items not on the group menu.
Healthcare supply purchasing is dramatically more complicated than, for example, book buying or even the sourcing of industrial materials, according to several panelists. So it requires a unique solution.
Medibuy's Smith predicted electronic commerce for healthcare providers will be done successfully "by a healthcare company . . . not a third-party, off-the-shelf, shrink-wrapped solution" developed for another industry.
After the panel discussion, AmeriNet President Robert "Bud" Bowen said in a state-of-the-union style address that his group would decide on the course for its own electronic commerce offering by year-end. Beyond an online catalog, already available for medical-surgical products and soon for pharmaceuticals, AmeriNet will start implementing full-blown Internet purchasing capabilities by building them, buying them or partnering with a third party during the first quarter of 2000.
"You don't want to be too soon," he said of the rapidly changing Internet, "but you definitely don't want to be too late."