Medicalbuyer.com has become a casualty of the increasingly crowded online medical supply business.
The medical supply procurement service went out of business last week, according to a report from Eoffering, a San Francisco-based investment banking firm. Several sources close to the company also confirmed the closing.
Cimtek Commerce launched Medicalbuyer.com to bring new efficiency to healthcare purchasing by enabling hospitals to buy medical equipment and supplies on the company's World Wide Web site. Cimtek, based in Johnson City, Tenn., is a privately owned for-profit company created in 1997 to provide e-commerce services to the medical supply industry.
Phones at Cimtek Commerce repeatedly played a recorded voice message indicating that offices are "currently closed."
According to a news report in the Kingsport (Tenn.) Times-News, Cimtek sent 45 employees home and "shut its doors" following the layoff of 20 other employees last month. Edward Rollins, M.D., co-founder and chief executive officer of Cimtek, told the Times-News that he is courting potential investors to rescue the company but doesn't know whether operations will resume.
ABS Capital Partners, a Baltimore, Md.-based venture capital firm, and Union Street Partners, a division of Nashville-based SunTrust Equitable Securities, gave Medicalbuyer.com a combined $11 million in venture capital last August, according to a Medicalbuyer.com company statement issued at the time.
ABS officials did not return repeated calls from MODERN HEALTHCARE; Michael Ory, a director at SunTrust, declined comment.
But another SunTrust director, Duncan Dashiff, was quoted in Medicalbuyer.com's August 1999 press release, boasting, "The company has a significant early-mover advantage within a vast market of opportunity."
Information on Medicalbuyer.com's financial performance, as well as the number of its hospital clients and affiliated suppliers, was not available at deadline.
Medicalbuyer.com's competitors included San Jose, Calif.-based Neoforma.com and San Diego-based Medibuy.com, both of which were formed with similar missions to move the healthcare supply business to the Internet.
This spring, Neoforma.com and Medibuy.com aligned with the two largest hospital buying groups--Novation and Premier, respectively. Through those deals, the fledgling e-commerce companies are promised a piece of the purchasing funneled through San Diego-based Premier and Irving, Texas-based Novation, the supply company for VHA. Between them, the two group purchasing organizations bought $24 billion in supplies last year.
But Medicalbuyer.com had not been able to partner with a hospital alliance to lure suppliers with big blocks of business.
"(Medicalbuyer.com) didn't have any traction with the GPOs," said Patrick Hojlo, a senior analyst at New York-based Banc of America Securities.
If they do not have a distribution deal with a group purchasing organization, such companies as Medicalbuyer.com are forced to aggressively market themselves to individual hospitals, which costs a lot of money and can easily lead to cash shortfalls, Hojlo said.
"Unless you were partnered with significant partners and had access to the customer bases, we always thought it would be a difficult market to penetrate," said Caren Taylor, vice president and senior research analyst at Eoffering, in an interview with MODERN HEALTHCARE last week.
In April, Cimtek Commerce received the Innovation in Healthcare Information Technology award sponsored by MODERN HEALTHCARE and San Jose, Calif.-based Cisco Systems. Cimtek won the award for Medicalbuyer.com's leveraging of the Internet to improve productivity through the supply chain (May 1, p. 52).