E-commerce retail giant Amazon (Nasdaq: AMZN) is making waves into the health care space, but the company has also been building a means to service providers in a more traditional way.
Amazon Business, the retailer’s B2B service line, is shaping the supply chain process for health care providers by enabling them to order in a familiar way online. After launching Amazon Business three years ago, the platform has more than 1 million business customers that use it to order everything from office supplies to certain medical equipment.
While Amazon doesn’t break out its customer base by provider type, the business platform services home health care providers, doctors, nursing homes, skilled nursing facilities, ambulatory surgery centers and more.
“[We] offer [the service] to businesses of all sizes—single doctors and offices with five employees or a 10,000-employee system, and everything in between,” Chris Holt, global health care leader at Amazon Business, told Home Health Care News. “[We have] home health customers and nursing homes, that’s right in our mid-size sweet spot, where it’s a company that maybe doesn’t have huge purchasing power, a lot of employees and a consumes a lot of products.”
Amazon Business takes the same approach as its consumer-facing retail site.
“[Amazon Business] is that [Amazon.com] experience but applied to business purchasing,” Holt told HHCN. “We launched three years ago [thinking, if] people love shopping at home from Amazon, maybe they will love shopping for work on Amazon.”
The purchasing model may help providers as they continue to streamline their businesses for value and efficiency to lower overall costs, he said. Amazon’s foray into the business marketplace could continue to expand in health care, as well.
“What we’re trying to do is take that work purchasing experience and ‘Amazon it,’” Holt said.
Amazon says its business service solves some of the issues in the “old process” of finding multiple supply vendors or even ordering inventory out of a catalogue. With the supply chain being online, providers can have a better account, with “inventory visibility,” of their ordering needs, Holt said.
Pricing and transparency
One of Amazon’s advantages as a retailer is its sheer scale and ability to bring down prices—just ask Borders, Books & Music, the once-giant bookseller that closed down after facing steep competition from Amazon. Pricing power, however, has also come up as one fear across the health care space as Amazon has hinted at its other ventures.
Some have speculated that Amazon could venture into the prescription drug business as a pharmacy and leverage its purchasing power to lower overall drug prices. The company also announced in January it is teaming up with Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) to form an independent company that would aim to lower health care costs for their own employees.
However, health care businesses are looking for ways to save money and time through more efficient operations.
“What is common is what any business wants is a nice, simple, transparent purchasing experience where they can find products and know that they are coming,” Holt said. “They want better pricing on their products and more transparency.”
However, the total disruption of business ordering hasn’t totally come to pass just yet.
Avamere Health Services, a Oregon-based senior living provider with a home health care brand called Signature, has been utilizing Amazon Business since December 2017. However, the platform is still only supplemental to Avamere’s other vendors, and is not yet being used by the home health arm of the company, according to Kelsey Margheim, purchasing manager at Avamere. Signature does not use Amazon Business.
“We have Amazon set up as a secondary vendor to be utilized when items can’t be procured from our preferred vendors,” Margheim explained.
From the office standpoint, a central person at an organization with multiple sites can use Amazon Business to look across all the locations at what works well for purchasing, what doesn’t work, and to share best practices. This can all be done within the Amazon Business account, according to Holt, and sharing the insights can mean a slight configuration in the account.
“[We have] visibility into the spend that was probably already occurring, allowing us to get that [through] enhanced reporting tools,” Margheim said. “[Amazon Business] streamlines the purchases so we’re not utilizing our purchase cards for every transaction.”
Avamere has also been able to use the business pricing for volume, Margheim said.
While Amazon is diving into the health care supply chain world, other health care providers are exploring new ways to leverage technology to boost their purchasing power, as well.
Health care system Ascension recently partnered up up with Ramsay Health Care Limited to create a new global supply chain joint venture to combine purchasing power. Ramsay, based in Sydney, operates moe than 230 health care facilities in six countries on four continents, while St. Louis-based Ascension is the world’s largest Catholic health system.
Rather than seeing these news models as major competitors, Amazon is supportive of the emergence of innovation, Holt said.
“There is tremendous pressure in the industry to create and try new models, leading to wild experimentation,” Holt said. “We think it’s a good thing. Companies are trying to change definitions and see if it will work. We like seeing that experimentation; we support that.”
Amazon also sees an opportunity to work alongside these new models as health care providers continue to consolidate.
“We like to provide the experimenters with tools [for] the new models,” Holt said.
Written by Amy Baxter