Rob Austin in The Wall Street Journal
Amazon.com Inc. is pushing to turn its nascent medical-supplies business into a major supplier to U.S. hospitals and outpatient clinics that could compete with incumbent distributors of items from gauze to hip implants. Amazon Business already sells a limited selection of medical supplies — some sutures, for example, but not more specialized items like hip implants — as well as industrial and office supplies.
Hospitals today typically sign contracts to buy supplies directly from manufacturers or from distributors, which include Owens & Minor Inc., Medline Industries Inc., McKesson Corp., and Cardinal Health Inc.
Also in the chain are companies known as group-purchasing organizations that negotiate on behalf of multiple hospital buyers, seeking to leverage collective demand. Hospitals formed and own a stake in many such groups. Fees and administration, marketing, and shipping costs account for an estimated 20% to 30% of health-care supply costs, according to a November research report by Citigroup Global Markets Inc.
“There’s a lot of people with fingers in the pie,” said Rob Austin, an associate director with Navigant Consulting Inc. and former hospital supply-chain executive. “There is a huge opportunity.”