Pricepalooza

Roughly 15 years ago, the CEO of an East Coast hospital system participated in a panel discussion that featured about a dozen “dot-com” executives exploring how the new online exchanges would revolutionize the healthcare supply chain.

As the lone provider among this august group, and seemingly the voice of reason with all the purchasing power that his fellow panelists coveted for their “dream-big” dot-com operations, he bluntly shared his vision of an internet-fueled supply chain with all the bombast and bluster of a third-world potentate waving his finger in front of global powers dictating how they should treat him.

His authoritarian comment on online product shopping and sourcing drew mixed reactions, and went something like this: “I want to be able to go online, get immediate and full access to information about every product, including its attributes and descriptions for quick comparisons, as well as all prices, regardless of GPO. And I want it for free.”

The audience and panelists reacted with nervous laughter and throat clearing as if trying to determine if this guy was serious or merely suffering from trepidation and naïveté. Obviously, he was poking at the white elephant in the room, alluding to an internet capability that most likely wouldn’t emerge for another 200 years in “Star Trek” time when primitive 20th century conceits, such as brand differentiation, competition and competitiveness, contractual secrets, intellectual property access, profits, security firewalls and the specter of disintermediating just about every player between the manufacturer and buyer, seemed quaint, standard business and trivial.

Fast forward to today when fiscal smelling salts and market competition long ago roused healthcare from its dot-com stupor, thinning the herd of online options as my annual roundup shows in the November Industry Guide. Back then the dot-coms were all about comparing products and product pricing, a concept they largely fumbled until the supply data standards movement scooped up the ball and took the discussion into different directions, gaining scant yardage with each passing year.

Yet now this idea of product and price transparency seems to be entering into a new renaissance.

Credit this development to Amazon Business’ push into healthcare, a maneuver that continues to pique curiosity and interest among those Supply Chain pros already comfortable with Amazon’s format.

And it didn’t take long before Amazon usurpers surfaced with a startup trumpeting service that “lets shoppers browse Amazon and then get exactly what they want today from a local store at the Amazon price.”

Meanwhile, HealthTrust, the third-largest group purchasing organization by annual purchasing volume per HPN’s GPO Headliners list, recently inked a deal with BroadJump for members to use that company’s price benchmarking tool. Remembering the backstory of both companies with roots steeped in tense competition you simply have to chuckle at the circadian rhythms and circuitous nature of strategic and tactical business relationships in healthcare. All told, the deal should generate a win-win for both organizations and usher in the next wave of progressive pricing strategies that have taken root outside of healthcare.

Contract pricing confidentiality clauses may not matter here as we remain far enough removed from implants for sale on some “deals dot-com” site. But that’s one part of a larger legal quandary. As a veteran supply chain executive with extensive experience in hospitals and GPOs told me offline, “…at what point, when someone knows all the deals and prices does it become anti-competitive in the market? High-level data would probably not be a problem, but when you start sharing SKU information, and using it to ‘make’ a market, I believe it is a different story.”

Still, Amazon’s foray into healthcare, and other recent business deals that seem to be a competitive/defensive shield to that expected “encroachment,” may indicate a shift in transactional attitudes and interests.

Maybe Supply Chain pros simply yearn for a different transactional experience from the traditional. And this shift complements the supply data standards movement to the point that an empowered buying capability (get it now, get it fast, get it at the lowest cost you can find yourself or from your or any participating GPO) may puncture protected pricing barriers.

But are Supply Chain pros really ready to work hard, have fun and make history by buying everything they need from A to Z easily?