Amazon set to disrupt medical procurement for US hospitals

Online retail giant Amazon is aiming to become the main provider of medical supplies for…...

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Online retail giant Amazon is aiming to become the main provider of medical supplies for US hospitals and outpatient clinics. The company has met with hospital executives at its Seattle headquarters several times in the last few months to research the medical supplies market in order to sell products via its Amazon Business marketplace.

Amazon is currently testing a program with a hospital in the American Midwest, where the hospital is ordering medical supplies for its outpatient facilities from Amazon Business.

The e-commerce company intends to start by selling basic medical items such as latex gloves and gauze, before eventually working up to offer a full range of specialist and sophisticated professional medical products for healthcare services.

Amazon Business’s Head of Global Health Chris Holt said that the current medical supply procurement system was outdated and that Amazon aimed to transform the process with new capabilities and features.

Amazon recently announced that it would be setting up a new independent healthcare company in partnership with JPMorgan Chase and Berkshire Hathaway. The three organisations said that they were looking at ways to implement cost reduction and increased customer satisfaction in their own employee healthcare programs.

Currently, US hospitals typically have procurement contracts with distributors and manufacturers which involve additional fees for admin, marketing and shipping that can account for up to 30% of the total cost of medical products. Amazon Business would provide hospitals with direct access to multiple manufacturers, cutting out supply chain middlemen and allowing for easy price comparison. It is hoped that this will increase competition and drive down costs.

Representatives of New York health systems have been meeting with Amazon regularly over the past 12 months, according to Phyllis McCready, Chief Procurement Officer at Northwell Heath.

“The front-end of Amazon is very appealing,” she said. “So I would think that things like that would be appealing and an improvement over what we’d do today.”

Nick Ford

Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.

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