AmeriNet, the St. Louis-based group purchasing organization, quietly has ditched its ambitious plans to merge with Broadlane, the electronic commerce company backed by investor-owned Tenet Healthcare Corp., MODERN HEALTHCARE has learned.
Officials at AmeriNet, which purchases supplies for 14,800 healthcare members, including 1,930 hospitals, said discussions that were launched last April were discontinued in early November by mutual agreement.
There was no public announcement of the failed talks, although AmeriNet did notify its members, said spokesman Mark Moyer.
Tenet spokesman Harry Anderson had no comment.
Although terms of the deal were never disclosed, Moyer said neither company had invested money in the venture.
Moyer characterized the parting as amicable and said AmeriNet will consider Broadlane as it searches anew for an e-commerce provider. But it has become clear that merging as one GPO is not going to work, he added.
The e-commerce "solution" for streamlining a notoriously inefficient supply chain was much more complex than anyone anticipated, Moyer said. Implementing the technology was difficult. Also, getting organizations to pay the costs of operating an electronic marketplace was going to take some arm-twisting.
"Nobody in the supply chain wants to pay transaction charges," he said.
The deal attempted a revolutionary strategy in e-commerce: teaming up a GPO that primarily serves not-for-profit hospitals with a GPO serving the nation's second largest for-profit hospital chain, Tenet (April 17, 2000, p. 32).
Broadlane, which is privately held, was formed in late 1999 by Santa Barbara, Calif.-based Tenet and Mountain View, Calif.-based Ventro, an incubator for business-to-business marketplaces.
Tenet subsequently folded its group purchasing arm, BuyPower, into the newly created company and now has a majority stake in Broadlane, said David McAdam, a spokesman for Broadlane.
Other shareholders include Universal Health Services, King of Prussia, Pa., and Community Health Systems, Brentwood, Tenn. -- both investor-owned hospital companies. In total, Broadlane shareholders represent more than 500 hospitals, according to McAdam.
Shepherding AmeriNet's membership to the electronic marketplace would have solidified AmeriNet's position as the country's third largest GPO while boosting Broadlane's tentative standing.
AmeriNet annually purchases more than $4.9 billion in supplies under 1,200 contracts.
Broadlane purchases more than $2 billion in supplies annually under 550 contracts.