By its own description, GHX is no longer simply an electronic platform providing a place for buyers and suppliers to do business. "I'd say, right now, we're a supply-chain service company focused on improving the (purchasing) process," Johnson says. "When we look at what areas we're moving into, our customers look to us to develop products that cover a large base" of the purchasing process.
As a result, Johnson says, GHX now offers products and services aimed at helping hospitals manage their entire purchasing process and suppliers automate their sales and order-response processes.
On the purchasing side, tools include systems for instantly reconciling invoices as well as data-cleansing services that remove mistakes and duplications from a hospital's chargemaster. GHX also is developing a tool that aims to prevent overpayment for supplies by making the most up-to-date pricing instantly available online to materials managers throughout a hospital system or affiliated purchasing cooperative. "We have a solution we're developing that will allow all parties to a purchasing contract to be synchronized in terms of pricing," Johnson says, "because now there's usually a lag in all the participating parties having correct pricing."
Suppliers are also able to tap into a number of sales management applications, including the use of handheld devices that allow sales force members to process orders and invoices on location as well as analytical tools to help vendors identify competition and new market opportunities.
GHX began to expand into the international market in 2001 with the establishment of its European headquarters in Brussels, Belgium, and a strategic alliance that linked GHX with the Canadian healthcare supplies purchasing portal Ormed Information Systems. The company's global expansion efforts have intensified during the past three years, with GHX acquiring several European electronic supply-chain companies, including last month's purchase of Market4care, the Netherlands' largest provider of hospital supply-chain and e-procurement services.
GHX executives say the company's growth strategy is aimed toward creating a more cohesive and effective supply-chain process for hospitals and vendors. But some materials management experts question whether the company's expansion into foreign markets and offering a broader array of services are premature and at the expense of developing a robust electronic marketplace that has the majority of U.S. hospitals and suppliers participating.
"I think (the GHX portal) has a great deal of potential, but I'm not convinced everyone uses the system to its potential," says William Stitt, director of materials management for University Community Health, a four-hospital system in Tampa, Fla. Stitt noted that the setup cost, which runs between $35,000 and $100,000 depending on the level of contracted services, and the annual subscription fee, around $15,000 per hospital, can be exorbitant for small or financially strapped hospitals. Also, some hospitals are so far behind on computerizing their purchasing processes that integrating into an electronic mass market isn't feasible.
Even those hospitals equipped with technical capabilities are challenged by some of GHX's more sophisticated purchasing tools, since electronic setup and training can be time consuming. For example, Stitt says that while his hospitals purchase about 40% of their supplies (which includes 100% of their medical-surgery supplies) from vendors doing business through the GHX portal, the vast majority of the system's invoicing is still done manually, using paper invoices. "A lot of it is we simply don't feel comfortable" with the GHX (invoicing) system.
A 2006 customer satisfaction survey conducted by GHX reflected a similar sentiment regarding hospitals' comfort level with using the portal's full range of services. Only about 27% of customers that order supplies through GHX also used the system's electronic invoicing service, and just 35% used its contract price-validation tool. What's more, the company received only an average rating overall from customers on the usefulness and quality of its onsite training program for hospital materials management staff.
GHX spokeswoman Karen Conway acknowledges that getting hospitals through the integration process and helping them become comfortable with using the system has been a barrier to greater participation in the marketplace. "One of the things everybody initially thought was if the hospitals can connect (to the portal) online then they can do business," Conway says. "But because there are so many very specific details that have to be satisfied, there has to be a registration and integration period. It's not that simple."
As a result, Conway says, GHX will begin testing a new tool in August aimed at automating a large portion of the registration and integration process "so it will take less time and effort to get on the exchange."
But getting hospitals comfortable with conducting business through the GHX portal isn't the only challenge. Anna Fox, vice president of contract operations and data management for the GPO Consorta, believes the bigger challenge for GHX is getting more suppliers doing business through the portal. Consorta's member hospitals now have the option to link to GHX's portal as a result of Consorta's recent merger with the HCA-owned GPO HealthTrust.