Four supply chain experts discuss massive changes on the horizon for ASCs — and how Amazon and other big players could radically disrupt the medical supply chain.
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Note: Responses have been lightly edited for length and style.
Mark Mele. National vice president of sales and marketing for Casetabs: Common surgical procedures where the vendor rep is no longer needed present a unique opportunity for larger players like Amazon to disrupt the medical supply chain. Offering pre-packaged instruments and keeping them on the shelf will allow Amazon to cut out the vendor and offer instruments at a reduced cost. Orthopedic cases are one area in particular where this model could work very well as procedures become increasingly more common, therefore the need for a rep [is decreasing].
Carl Natenstedt. CEO of Z5 Inventory: Amazon is a perfect fit for ASCs. The whole Amazon model is well-suited to deliver and distribute to smaller-sized facilities. Amazon requires a business partner that's agile, which makes ASCs the ideal customer. They're able to make quicker decisions about who gets their business, so they can take advantage of Amazon's offerings, whereas a hospital has this entrenched relationship with traditional distributors. That's where Amazon fails.
What Amazon needs to do, if [it wants] to enter healthcare's supply chain proper, is get those old distributors onboard with the Amazon model and get them using Amazon's distribution centers. In the meantime, with enough product breadth, Amazon can become the go-to distributor for ASCs' supply needs. But they have to do it quickly, before ASCs move to a hospital-like GPO model entirely.
Ruben Taborda. Senior director of supply chain customer solutions for Johnson & Johnson Health Care Systems: We have to operate with a sense of urgency to adapt to the market's interest in affecting fundamental shifts in the healthcare market. We are continuously assessing opportunities to improve healthcare in key areas such as innovation, professional education and services. Our CareAdvantage approach, for example, aligns our broad capabilities with the needs of health systems and ASCs to improve efficiency, decrease complexity, and reduce waste associated with procuring, delivering, and distributing our devices. Another priority is understanding their needs and exploring how we may help them as they think about partnership models. While many health systems and ASCs depend on highly skilled sales consultants who provide technical product support and ensure that the right implants, technology and instrumentation are on site each day for cases, certain products that don't require onsite support could be a future consideration for these types of online distribution models.
Garry Cooper, PhD. CEO and co-founder of Rheaply: Most healthcare facilities have a procurement manager in charge of the purchasing for all of the hospital employees, and this is resulting in unnecessary inefficiencies in the medical supply chain. After all, it's the end user that knows exactly what he or she wants at any given time. Besides Amazon as a potential disruptor, [Oakland, Calif.-based] Kaiser Permanente follows a procurement strategy that aims to put life-saving tools, products and resources (especially environmentally sustainable products) into the hands of the health professionals at the most opportune times, part of a broader mission to drive healthy communities and economic impact. Another potential disruptor (we think) is Rheaply, the first asset exchange manager that allows organizations to buy, sell, trade, donate or rent surplus scientific resources that might otherwise go to waste. We partner with leading research institutions to reduce the cost of doing [research and development].