Materials Managers Ask Key Question About Dot-coms: Where Do We Go From Here?

Answers are hard to come by.

The Interface Issue
If a recent materials management e-commerce summit in San Antonio was any indication, materials managers are extremely nervous about the prospect of having to work with Internet-based procurement systems that fail to integrate with their hospital materials systems.

The 40 or so materials management executives who attended the summit, which was organized by the Association of Healthcare Resource and Materials Management, don't want to enter orders into a Web procurement package, then do it again into their materials system. Double keying wastes time and heightens the possibility of error.

The weekend summit featured representatives from Medibuy.com, Medpool.com, Neoforma.com, Promedix.com, and Omnicell.com.

But trying to understand how each dot-com would take care of such interfaces was, and is, another matter.

At the summit, Omnicell touted its years of experience in interfacing hundreds of providers with its automated storage cabinets. Neoforma, meanwhile, explained that it has hundreds of licenses to begin writing such interfaces.

Medibuy, on the other hand, said it sidesteps some of these thorny issues by using something called an e-portal, which takes orders and brings them back into the hospital's materials systems.

Materials managers have the unenviable task of trying to figure out the merits and drawbacks of each approach. Given the complexity of the subject, that won't be easy.

The Great Hope
Materials managers are skeptical about the dot-coms' abilities to help them slash the hours of wasted time spent reconciling invoices. Those at the summit appeared to understand how Internet-enabled information exchanges could eliminate the problem, but they questioned whether in fact they would.

During the Neoforma session, for example, some materials managers expressed concerns that Novation (with whom Neoforma recently signed a comprehensive agreement) would see the pricing the materials managers had negotiated on their own with Novation contract vendors.

That begged the question, Who has the right to enter pricing? Whose pricing takes precedence over whose?

As the discussions progressed, it became clear that even if technological solutions do exist to tidy up some of today's haphazard materials processes, they won't work unless some very human, business-process-related issues get resolved first.

The rash of recent GPO/dot-com alliances begged another question: Whose side are you on?

At one point during the summit, a speaker from Neoforma reassured the materials managers that although Neoforma was Novation's exclusive e-commerce partner, Novation was not Neoforma's exclusive GPO partner. Still, one wonders if the market will perceive Neoforma to be Novation's baby, Medibuy to be Premier's, Ventro to be Tenet's and AmeriNet's, etc.

One-stop Shops
Another question with a cloudy answer is this: How many one-stop-shops can this industry accommodate?

At the summit, most of the dot-coms portrayed themselves as the ‘go-to' portal for all purchasing transactions. But does that really make sense?

Are dot-coms fighting the same battle that EDI providers fought more than 10 years ago? Industry veterans will remember how Baxter, Abbott, Johnson & Johnson, SunHealth, et al, each wanted to be perceived as the mother of all EDI systems.

Even though the supplier's voice was largely silent at the San Antonio summit, the question was raised: How many sites can suppliers support? One speaker said that the customer would drive this. In other words, customers can dictate who plays ball with whom. But hospital customers have been timid about such things in the past. What's different today?

It seems clear that few if any materials managers perceive e-commerce as a disintermediation play. In other words, they expect their distributors to stay firmly rooted in the supply chain.

But if there is a group out there who should be worried about what is transpiring, it is the vendors of materials management information systems.

If the dot-coms can deliver the reports they say they can, they could end up replacing some or all of what traditional materials management information systems do today, or at least changing the way such systems are sold.

Materials managers appear to be catching on to the fact. The tone among those at the materials management summit was this: If you're looking for a new materials management system, wait awhile. You might be able to stack one of the Internet-enabled purchasing programs on top of your existing MMIS, or you might simply be able to replace the MMIS with a dot-com's system.

Virtual Trading Floor
Of the five dot-coms that presented in San Antonio, Medpool.com differed the most from the others. The company is building what it hopes to be a virtual trading floor for buyers and sellers, hooking up a number of buyers wishing to buy pre-identified goods with vendors wishing to sell them. Then the two conducts a two- or three-day trade, during which vendors bid on the business.

In the Medpool.com session, questions centered not so much on whether the system can interface with a hospital's MMIS, but how can hospitals identify future trades, whether tiered arrangements can be constructed given the ‘trading floor' format, and whether distributors can participate as well as manufacturers. (The answer to the last one: Yes.)

The well-executed weekend did much to move the dialogue forward. Still, when it was all over, it's likely that materials managers got on their planes asking themselves, ‘Where do we go from here?'

Mark Thill is editor, Repertoire Magazine.

Edited by Rick Dana Barlow

Source: Hospital Network.com, sister website to Medical Design Online.