Bridging the digital divide, group purchasers Medibuy.com and Neoforma.com separately have signed milestone agreements with holdouts in the upper tiers of the supply chain: manufacturers and distributors.
Ironically, those agreements may hamper the development of the e-commerce businesses founded by the same manufacturers and distributors.
San Diego-based Medibuy scored last month with a three-year deal with GE Medical Systems to provide diagnostic imaging products through Medibuy's Web-based marketplace, which is still under construction (March 19, p. 16). Details of the agreement were not disclosed, including whether GE has agreed to pay any transaction fees to conduct business at the site.
Although GE represents just another of 29 suppliers so far willing to conduct business through Medibuy, the agreement represents a coup. As one of five founding partners of the manufacturers' budding marketplace, the Global Healthcare Exchange, Westminster, Colo., GE has funded an effort to directly compete with marketplaces such as Medibuy and Neoforma, which are heavily backed by group purchasing organizations.
"(The agreement is) a benchmark for us," said Dennis Murphy, president and chief executive officer of Medibuy, which has strategic relationships with HCA-The Healthcare Co., Nashville, and Premier Purchasing Partners, San Diego. "I think the concern with the suppliers has been whether this brings value to them, and that's a question we want to demonstrate."
Although Medibuy has made a significant inroad on the supplier side, San Jose, Calif.-based Neoforma scored a similar triumph with distributors. In February, both Allegiance Healthcare Corp. and McKesson HBOC signed agreements to accept orders through [email protected], the electronic mall being built for Irving, Texas-based Novation, the joint supply company of VHA and University HealthSystem Consortium. Both McKesson and Allegiance (through its role as a subsidiary of Cardinal Health) are founding members of the New Health Exchange, a fledging marketplace being built by the healthcare industry's biggest distributors (Feb. 5, p. 26).
Plugging into hospital purchasing departments is the easy part for both Medibuy and Neoforma. Their group purchasing partners practically have guaranteed both hospital customers and financial support. But the question hovering over these fledgling electronic marketplaces always has been how and if the various marketplaces would plug into each other.
Officials at New Health insist they will work behind the scenes to streamline the virtual supply chain just as they do in the real world. They say they are not in business to push anyone out. They just want to stay in the game. Hoping to jump start its operations after its formation in April 2000 and after deals between some of its founding members and Novation, New Health relaunched itself last week, changing its name to HealthNexis on March 31. It expects to release its first product this month. That product has transactional capabilities and data- and contract-management applications, the Minneapolis-based company said.
However, Global Healthcare Exchange officials said the GE deal with Medibuy will not change the relationship between the exchange and GE.
-With Jeff Tieman