CEO SUMMARY: Laboratory members of Premier will soon be purchasing instruments, reagents, and supplies through medibuy.com’s Internet healthcare e-commerce site. Four major lab industry suppliers are actively working to link with the medibuy.com and Premier Web sites. For Premier, this is part of a comprehensive effort to upgrade the services it offers its member hospitals and laboratories.
HEALTHCARE E-COMMERCE is considered by many business experts to be a threat to group purchasing organizations (GPO).
But Premier, Inc. is aggressively embracing healthcare e-commerce solutions. Since July, it has signed contracts with four major lab industry suppliers to jointly use medibuy.com as the transaction vehicle to allow Premier hospital members to purchase laboratory instrument systems, reagents, and supplies.
Four Diagnostics Vendors
“We have established medibuy.com contracts with Dade-Behring Corp.; Beckman Coulter, Inc.; Fisher Healthcare, Inc.; and Roche Diagnostics, Inc.”, stated John Biggers, Vice President of Corporate Development at Premier. “In the next 60 days, we expect to sign similar agreements with two or three more of our national laboratory contract business partners.”
“We believe that a significant amount of money can be saved by moving the purchasing functions for laboratory equipment and supplies to an Internet-enabled buying exchange,” noted Biggers. “In working with medibuy.com, our goal is to have a single electronic data interchange handle purchase orders, invoicing, and payments for our member hospitals and laboratories.”
“To make this possible, these four national lab business partners have agreed to invest the time and money necessary to hook up their resources to the medibuy.com Web site,” he explained. “Expectations are that direct savings and non-measurable benefits will be worthwhile for both Premier member laboratories and the diagnostics suppliers.”
But Premier’s expectations go beyond lowering the costs of simple purchasing transactions. ”This is just one element in our plans to establish a full menu of added value services for Premier laboratory members,” stated Biggers. “Traditionally, GPOs primarily helped their members through national contracting and similar services relating to purchasing.”
“We have a different vision at Premier. We intend to offer our lab members specialized services and resources that allow them to get the most from their laboratory organizations,” noted Biggers.
“For example, we have an ever-growing number of laboratories participating in our LabFOCUS“ benchmarking program,” he continued. “This is a comparative data tool and performance profiling service.
“A steadily-growing number of labs are feeding data into this benchmarking program. Our intention is to develop “best practices” guidelines based on the performance of well-managed laboratories,” noted Biggers.
“We want to use the experience of the best-performing laboratories to help us understand which diagnostic instrument systems work best in different types of laboratories,” he continued. “Once we have that knowledge, we can develop better national contracts for diagnostic instrument systems and help Premier member laboratories use these products to generate improved performance metrics in cost reduction, improved test quality, and overall lab productivity”.
Benefits To Lab Suppliers
The medibuy.com offering at Premier also promises significant benefits to the diagnostics vendors who participate. “For the first time, these suppliers will have the ability to accumulate data in a central location,” stated Todd Abner, Vice President of Global Supplier Contracting at medibuy.com.
“This will provide them more accurate information about contract compliance, for example,” he explained. “They can then direct their marketing and service staff to the laboratory locations where appropriate follow-up is needed. It provides them with the opportunity to make real time decisions about a variety of business issues.”
Abner expects that medibuy.com will provide a higher level of two-way communications between lab suppliers and their laboratory customers. “Remember, we are helping these diagnostic manufacturers integrate their information systems through our ASP (application service provider) functions,”he said. “This will enable Premier member laboratories to send and receive messages on all business subjects, such as product notices, service issues, and the like.”
THE DARK REPORT believes that this business initiative by Premier is the first major example of Web-based transaction links between a GPO’s laboratory members and lab industry suppliers. Laboratory administrators and pathologists should expect to see this project spur more e-links with suppliers.
Direct Link To Customers
Once these diagnostic manufacturers invest time and money to integrate their systems with medibuy.com’s healthcare e-commerce system, they are positioned to directly link with any laboratory customer. As a consequence, diagnostics suppliers will have an economic incentive to enlist other laboratory customers to work through healthcare transaction portals like medibuy.com.
This is another example of how ASP-based, Internet-enabled services can lower the cost of doing business. The impact will be to cause traditional business practices to shift over toward these new business models.
Premier expects the first lab vendor links to be operational in just a few weeks. If this system works, expect to see other lab vendors connect in this type of communications arrangement.