Amazon eyes another healthcare shake-up: Getting into supply chain

Following the announcement that Amazon, Berkshire Hathaway and JP Morgan Chase are forming a healthcare company, Amazon continues to propose disruption in the healthcare space as it moves toward a potential healthcare supply chain business.

"With medical supplies specifically, we hear from both healthcare manufacturers and healthcare customers that they want to find ways to simplify purchasing and reduce costs as a means to address systemic issues that take away focus from patient need," an Amazon spokesperson said. "Many large health systems have numerous satellite facilities, and as care shifts closer to the home, they need to address gaps and invent new ways to simplify supplies moving to locations beyond the hospital."

[Also: What the Amazon, Berkshire Hathaway, JPMorgan deal means for payers]

There have certainly been precursors to the retail giant's healthcare maneuvers of late. Recently, several state pharmaceutical boards approved the company as a wholesale distributor, which is a necessary first step toward Amazon to sell medical equipment.

Amazon officials have been meeting with hospital executives, many from prominent systems like New York's Northwell Health, to brainstorm ideas and flush out potential issues for growing its business to business marketplace such that it could supply hospitals with anything from gauze to joint replacement devices, according to a report by the Wall Street Journal. 

Amazon, which is already already selling  everything from toys and books for children's hospitals to some medical supplies, has joined with a large midwestern hospital system and they are conducting a pilot program to test whether they can order the needed supplies for its 150 outpatient locations, WSJ added. The pilot program is customized to the system involved and allows leaders to compare prices from their usual distributors and partners with those of Amazon Business.

Amazon's spokesperson said that its Amazon Business analytics add a layer of oversight and control because they allow decision-makers to monitor or approve purchases of their teams using group and user management with workflow approvals.

For a sector of the healthcare industry that is particularly besieged by complicated contracts, middle-men fees and administrative costs, Amazon certainly could shake things up for suppliers as well as group purchasing organizations that get paid to negotiate supply prices on behalf of hospitals.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com