Healthcare procurement is in the midst of a significant transformation, driven by the agility developed in response to pandemic-related challenges and evolving patient care demands. This transformation is marked by the adopting of nontraditional purchasing solutions—specifically, e-commerce and business-to-business-to consumer (B2B2C) models.
B2B2C models offer adaptability and mitigate disruption risks by leveraging established online tools known as outsourced e-commerce solutions. These e-commerce solutions manage specific aspects of the supply procurement process for medical supplies, increasingly becoming a part of vendor portfolios as buyers prioritize efficiency and convenience. Essentially, these solutions work with providers, medical insurers and other service companies to ship supplies directly to their customers, offering an experience similar to popular fulfillment services.
This rapid shift toward e-commerce is made apparent by how quickly market projections have changed in only a few years. The global healthcare e-commerce market is projected to climb from $309.62 billion in 2022 to $732.3 billion by 2027.
Industry trends demand agility
The rise of e-commerce in healthcare procurement coincides with several important industry shifts. One is the increased demand for home care, driven by an aging population and advancements in medical technology that allow care to be safely delivered outside traditional healthcare settings.
Another factor is the ubiquity of online interactions, according to Bill Kopitke, General Manager and Head of Healthcare for Amazon Business.
"Because organizations are being challenged with cost reduction, they're having to break apart some of what they've been buying and whom they've been buying from,” Kopitke said. “They're asking, 'Could we buy a comparable supply at a better value elsewhere? Do we have too many intermediaries involved? Is there a better fulfillment model?' Everything is being questioned, from medical-surgical and capital to business commodities such as laptops."
However, healthcare is ahead of other industries in the migration to digital buying channels. Even pre-pandemic, 94% of healthcare equipment buyers researched product features online first, and 90% went online to identify suppliers.
“Technology is bringing options, transparency and data that simply did not exist on the B2B side or in the healthcare space before. The number and variety of providers and their staff who now have real-time, transparent data about availability, price and supply options is significant,” said Kopitke.
B2B2C and direct drop-shipping: Potential benefits
B2B2C models empower healthcare providers to leverage the infrastructure and expertise of established e-procurement solutions, like Amazon Business, which have responsiveness, flexibility and visibility at their core.
Providers and patients alike benefit from the streamlined procurement processes these e-procurement solutions facilitate. While providers gain access to a wider range of medical supplies, patients benefit from convenient access to the products they need, often with the added advantage of free two-day shipping with Business Prime (a paid feature).
“It surprises people when they realize that we have a high parity of what they're buying today—and we have even more selection including medical supplies that they could switch to at a lower price, including shipping costs," Kopitke said. “While we’ve been selling medical supplies for years, we’re experiencing in 2024 a watershed moment where the most reputable medical manufacturers and suppliers are uploading so many of their items to sell on e-commerce that our teams are adjusting to keep up with the demand.”
E-commerce solutions also offer proactive purchasing capabilities through robust technology and data infrastructure. This gives procurement teams greater visibility throughout the process, allowing for more informed decision-making and a sense of control over the procurement process.
While health system executives and supply chain leaders might consider investing in their own data and analytics capabilities, McKinsey & Co. notes that “organizations outside the hospital’s walls—such as those that supply medical devices, pharmaceuticals and services—often have better visibility into a health system’s spending and utilization than the system itself does.”
In addition, direct drop-shipping services provided by e-commerce sites can eliminate the need for healthcare providers to maintain extensive inventories. By delivering supplies directly from suppliers to patients or insurance members, storage costs decrease and administrative burden for procurement teams is reduced. This approach offers patients a more personalized experience by giving them greater control over their care.
Healthcare innovators embrace new strategies
Innovative healthcare organizations recognize the potential of B2B2C strategies. These organizations are exploring new approaches to connect patients directly with suppliers, aiming to enhance efficiency and convenience for their patients and the organization.
Such innovations pave the way for B2B2C and outsourced e-commerce to become commonplace within healthcare supply chains.
Considerations for expanding procurement channels
While e-commerce solutions offer a range of potential benefits, healthcare organizations must weigh several factors when expanding their procurement portfolio to include these emerging channels.
"Finding a central place to source, compare offers, procure and conduct spend analysis in real-time is key,” Kopitke said. “Antiquated systems hospitals use for procurement often are static supply offers with lagging and incomplete spend data. Establishing a new way of achieving supply chain transparency is key."
Some concerns mirror those encountered in personal online shopping experiences, such as:
- Price gouging: The potential for inflated prices, particularly for in-demand medical supplies.
- Black/grey market products: The risk of counterfeit goods or products from unauthorized channels.
- Inventory and delivery issues: Backorders, non-delivery or delays can disrupt patient care.
- Product integrity: Concerns about altered components, faulty manufacturing or unauthorized substitutions.
Healthcare organizations should implement a comprehensive vetting process for potential e-commerce partners to mitigate these risks. Essential considerations include vendor reputation, product sourcing, cybersecurity measures and policies for handling damaged, incorrect or counterfeit goods.
By carefully weighing these factors and implementing a thorough vetting process, providers can leverage the benefits of B2B2C models and outsourced e-commerce solutions while mitigating associated risks.
The new normal in healthcare procurement
Factors like the rise of home care, the increasing adoption of telemedicine and the growing demand for convenience drive the future of healthcare supply chain management toward B2B2C models and outsourced e-commerce solutions. These innovative approaches can help organizations adapt to a fast-moving landscape, revolutionizing how medical supplies are sourced and delivered.
By embracing the new normal in supply procurement, healthcare has the potential to unlock a new era of efficiency, cost reduction and improved patient experience.
