Vendor-sponsored Web exchanges aim to capture online purchasing

By Erik L. Ridley, AuntMinnie staff writer

April 20, 2000 --

While many industries have been rocked by the seismic shift to online purchasing, healthcare has remained largely untouched by the growth of business-to-business e-commerce. Times appear to be changing, however.

Earlier this month, several major healthcare equipment providers announced the formation of Global Healthcare Exchange, an independent online company hoping to facilitate the exchange of information related to buying, selling, and distributing medical equipment, devices, and healthcare products and services worldwide.

Participants in the Global Healthcare Exchange will include Johnson & Johnson, GE Medical Systems, Baxter International, Abbott Laboratories, and Medtronic. And this week, BD (Becton Dickinson), Guidant, and Boston Scientific announced they would join the exchange as participants and equity partners. The venture has not yet released a Web address, but expects to do so in the next few weeks.

Global Healthcare Exchange will join a swiftly evolving healthcare e-commerce landscape featuring numerous ventures such as Neoforma.com, Medilink.com, medibuy.com, and others (including AuntMinnie.com) looking to take advantage of the Internet's potential for more efficient and cost-effective healthcare equipment procurement.

While J&J, GE, Baxter, Abbott, Medtronic, and now BD, Guidant, and Boston Scientific will be owners of Global Healthcare Exchange, equal access will be provided to all manufacturers, suppliers, distributors, providers, group purchasing organizations, and other trading partners, according to the participating companies.

With Global Healthcare Exchange, healthcare facilities will be able to research and buy medical equipment online, as well as track orders. In addition to handling transactions, the exchange will allow customers to manage their purchasing activity, said Paul Mullen, global program manager for e-commerce at GE Medical Systems. "We wanted to create a model where buyers and sellers could get purchasing process improvements," he said.

While transactions will be free to purchasers, value-added services such as advanced purchase management reporting and equipment matching will be available for a fee, Mullen said. Clinical content as well as financing capabilities will also be included on the site, which will begin operations in the third quarter. All of the founding members have agreed to make their entire product lines available for purchasing, with some limited exceptions, such as non-hospital pharmaceuticals.

While focusing initially on selling new equipment, the exchange expects to also include used equipment in the future as more companies sign on, Mullen said.

"We want to offer everything that's sold into the hospital through the exchange," he said.

Ultimately, success for the exchange will likely be determined by the level of participation of other vendors, including competitors of the founding firms.

Early indications are that this may not be a problem. In fact, 25 vendors -- including at least two imaging or PACS firms -- have already contacted the exchange to express interest in participating, Mullen said. Vendors will likely pay for their participation with a subscription model.

For GE, participation in the exchange represents an expansion of its recent forays into online equipment purchasing. The Waukesha, WI-based vendor has offered online purchasing of ultrasound scanners for nearly a year, and began taking orders online for its OpenSpeed MRI scanner shortly after the product's launch at the 1999 RSNA meeting.

At the European Congress of Radiology meeting in March, GE announced it would begin offering its entry-level CT/e scanner over the Web, initially for European customers (see story below). Online purchasing capability for CT/e in the U.S. was expected by the end of this year. The firm sells thousands of other products from its Web site as well.

Global Healthcare Exchange isn't the only vendor-sponsored online healthcare marketplace in development. AmeriSource Health, Cardinal Health, Fischer Scientific, McKesson HBOC, and Owens & Minor are also planning an independent, vendor-neutral healthcare product information exchange, aimed at streamlining processes involved in identifying, purchasing, and distributing pharmaceutical products, medical-surgical products, devices, and other laboratory products and services.

The participating companies expect to complete a definitive joint-venture agreement by the end of July, with implementation targeted by the end of this year. The exchange, which has not yet been named, expects to work with group purchasing organizations as well as healthcare manufacturers that are developing their own exchanges, according to the participating firms.

By Erik L. Ridley
AuntMinnie.com staff writer
April 20, 2000

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GE launches initiative to sell CT scanners on the Internet. March 7, 2000


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