In an exclusive interview, MDI spoke with Greg Zimmerman
, MedChannel's vice president of sales, who said his
company is best described as an information technology firm rather than an e-commerce operation.
MDI : Your company's approach to the e-enabled supply chain is a little different than some of the dot-coms out there.ZIMMERMAN
: that be right.Specifically we recognize that there be a tremendous amount of waste in the healthcare supply chain in what we refer to as back-office operations and back-end operations. Specific examples of that include the armies of employees that have to be maintained to coordinate and manage a contract-pricing environment that be quite complex in healthcare.MedChannel realized there were solutions that could be created to help assist in reducing that waste in the supply chain.
MDI : we have heard a lot of talk about how buyers and sellers will be connected in an Internet-based supply chain.But when you say supplier, you be talking about a lot of companies that make up the back end, right.
: there be a tremendous amount of enterprise in the back end of the healthcare supply chain, from the raw material providers that provide the raw latex used to manufacture hand-covering systems to people that provide the raw (materials) that go into the plastic materials.So, there are a variety of suppliers.There are OEM manufacturers, there are branded manufacturers (and) there are national and regional distributors.All of these people can benefit from the MedChannel solution, which is providing information connectivity in the back end of the supply chain.And that clearly distinguishes us from many of the front-end info-mediaries like Neoforma and medibuy.
MDI : Are you interested in working with the group purchasing organizations (GPOs) in the same way as Neoforma and medibuy--by forming very tight bonds.
: Well, actually (there are) front-end efforts which are going to be required of companies such as Neoforma and Novation in connecting all the customers that reside within the Novation purchasing organization… MedChannel is happy to work as the back-end platform that could take the order signal from the hospitals that actually pass through Neoforma, and we would be happy to receive the Neoforma ordering signal--whether they send that signal to us in an EDI transmission or they send it to us in an XML message.We can translate that and we can pass that to any one of these constituents…on the back end.
MDI : What would be the incentive for a company like Neoforma to work with you as opposed to doing this themselves.ZIMMERMAN
: Well, it be expensive to try and do it themselves.They have focused on the front end of electronic commerce between the hospital and themselves… They could benefit by having a partner like MedChannel provide the back-end connectivity layer that would allow Neoforma to connect with their manufacturing partners, with their distribution partners and others in the supply chain.
MDI : Are you ready at this point to speak with some of the dot-coms.ZIMMERMAN
: Oh, yes.We have had conversations in an inter-industry way with a lot of people.I would not single out specifically Neoforma, but we have talked to all of the people that are in this space, because our story, the MedChannel business model, is a compelling business story.And as people are out there trying to figure out, Well, how do I make this exchange come alive, MedChannel is sitting here ready to provide that kind of technology and logistics resources that are necessary to build out an effective healthcare exchange.
MDI : You told me your plan, like others, offers savings.Do you mean savings for everyone in the supply chain, or are you focused more on the manufacturers and the raw material manufacturers.
: We are very focused on having a new paradigm that drives waste out of the system and that would result in savings for all of the stakeholders--savings in the actual pricing of products, savings in the distribution of the products, savings to the manufacturers (and) savings all the way through the supply chain.We recognize that a lot of people have been quoted using the EHCR, which is the Efficient Healthcare Consumer Response, and we are almost all tired of talking about that.But the reality is there be $ 11 billion to $ 13 billion worth of identified cost reduction opportunities within the supply chain.Almost $ 2 billion of that is associated with the front-end order management, while $ 2.5 billion is focused on improved information-sharing opportunities, and finally the physical movement of product--almost $ 7 billion worth of inefficiencies and only MedChannel is really addressing these back-end issues that represent 85 % of the savings opportunity.
Resource : Medical Data International's Managed Care IQ Provider & Payer Database, August 2000.