Hospital Purchasing Co-Ops Link Up to Make Buying On the Web Easier
Buying co-ops representing more than two-thirds of the nation’s hospitals are banding together with three fledgling electronic-commerce companies to demand that manufac- turers and distributors of medical supplies adopt standard product codes to ease the buying of supplies over the Internet, Wednesday’s Wall Street Journal reported . . .
Dow Jones Business News, June 14, 2000
I was still focused on the remnants of the capital-planning group in the company...
Jeff’s role in the new organization was much less defined than mine. And he was definitely happier with his unconfined position. He had been assigned a small number of limited-duration projects by Bob. In his free time, Jeff assigned himself some additional tasks.
One day, my phone rang. “Wayne, how are you doing . . . Hey! I have a brilliant idea!” It was like old times.
Jeff’s voice had that old, familiar fighting edge. His brilliant idea this time was to lead the formation of an industry standards group. The group would create standard ways of classifying and identifying healthcare products and initially consist of GPOs and Internet e-commerce companies.
“The manufacturers and distributors have come together around some fuzzy idea of fostering efficiency through cooperation,” Jeff said. “If we combine the major e-commerce players with the major GPOs, then we’ll have nearly all of the hospitals banding together to reject the idea that the suppliers could or should control how they get their supplies. All of their expensive new offices and empty press releases would be useless!”
“Well,” I said, “it seems to me that the suppliers should actually be the ones to drive standards, don’t you think?”
“Yes, of course, but once the GPOs band together, the suppliers will have to capitulate and lobby to join the new standards group. After all, they can only go so far to alienate their customers. Plus, if the GPOs band together with the e-commerce companies . . . that will raise our position and reinforce our permanence in the eyes of the entire industry.”
I wasn’t sure that Jeff would be able to convince the very competitive GPOs to band together with Neoforma and its customers. And I wasn’t sure that this level of posturing was necessary.
But I had always been so frustrated every time I thought about transparent promises by the suppliers, that I thought Jeff’s cynical approach might be worth the effort.
Over obstacles that only Jeff could hurdle at his best, a new standards organization was formed. Jeff brought together the necessary parties without anyone quite knowing who had even started the idea for the group!
With substance equal to the two supplier coalitions, the new standards group was announced.
The press wrote about what great potential such an organization had to improve the healthcare supply chain. They wrote about how much doubt this new group shed upon the purpose of the supplier coalitions.
The industry heaved a collective sigh. Balance between buyer and supplier had been achieved again.
The standards group was eventually joined by the manufacturers and distributors. They did implement some major improvements to the way things were done. Their open standards would fundamentally shake loose some of the mechanisms manufacturers used to control the flow of information to hospitals. Jeff had created a very useful organization.
On one hand, Jeff and I were disappointed that we had lowered ourselves to playing the game on the same field as these opponents. On the other hand, we took some satisfaction from the fact that we did know how to play that game when necessary.
It reaffirmed our conviction that Neoforma was going to survive in spite of them.