A few years ago I wrote an article with the help of a couple of colleagues called “Healthy Vascular Systems Promote Peak Hospital Performance” and posted it to this website. The article discusses the analogy and nature of supply systems to Vascular systems and how critical they are to the performance of the organ or business that they support. Since the time I drafted that article I’ve been following articles pertaining to Amazon’s investments in healthcare and note that Amazon has recruited nationally for positions to lead their charge into the hospital supply chain. I believe that Group Purchasing Organizations (GPOs) and distributors that are ignoring the potential impact this disruption may have clearly have their head in the sand.
So is this necessarily a bad thing? Personally, I’m really not sure. I’m not positive how Amazon can fulfill some of the roles that the current GPOs and Distributors have such as value analysis, strategic sourcing and reduction in clinical variation. I can however easily see superior real time data analytics compared to the multitude of disparate systems we have in play today. I believe there will be less branch-out-of-stock and consequently less hotshot fees.
I predict the ultimate death of the purchasing agent as we know it, since why would one need such a position when the lowest level clerk can just shop on Amazon for what the nurse wants? It’s a fact anyway that in many health systems the responsibilities in the position of the purchasing agent have been diminished to being an order-processor of pre-defined goods that are maintained on an electronic item file (contract goods selected by utilization managers and strategic sourcing) and fixers of cost-messages. I don’t really think those FTE will disappear, but I think their roles will change or they will be farmed out to the departments to assume the roles of Amazon shopper. And as for the cost-messages, I think those will mostly disappear as well in the Amazon world as Amazon will simply always change the price to the lowest possible prices. So who will compete with Amazon? Will the GPOs and Distributors align with a Mafia type muscle to hold them at bay? Will Walmart enter the foray and further disrupt conventional supply chains? These are interesting times my friends. I can’t wait to see what innovations Amazon will bring and how they will execute their assault in this dynamic industry.
Recent articles have pointed to Amazons over-valuation and in fact their stock price has sunk as of the writing of this blog. In the numerous articles that I’ve read from the financial “geniuses” that point to all of the reasons why their stock is over-valued, not one of them has mentioned that Amazon is slowly aligning for their attempt to disrupt the healthcare supply chain. If they are successful will they still be over-valued? Or is now maybe a good time to start tracking Amazon stock and get in when they hit fire-sale prices? This is fun to watch unfold…………I for one only wish that it could happen faster!
PS – I wish everyone a very happy Holiday Season! Best Regards, Mick Dubuis