Amazon Business offers hospitals an alternative to the supply chain

Photo: Miscellaneous Photos/Getty Images

Ochsner Health System supply chain the partnership with Amazon Business allowed the healthcare system in New Orleans to have financially stable prices for non-medical purchases.

“From a financial standpoint, we saved money in some cases and broke even in others,” said Régine Honoré Villan, senior vice president of supply chain network and director of supply chain at Ochsner Health System. “We are always looking to save money. We will be looking in several places. If it’s more on Amazon, we say we were able to find it at Staples for $20. You are selling it for $22. pay $20 or less. Every time we’ve done it, we’ve been successful.”

This practice, which Honore Villan calls “dynamic pricing,” works because prices will only go down, she says.

According to Bill Kopitke, Amazon Business’s head of healthcare, B2B Amazon Business offers buying and bulk buying that’s not unlike how regular Amazon operates.

“We built Amazon Business around the customer experience,” Kopitke said. “Think about the Amazon buying experience. To be able to see multiple offers in real time, transparent final price, be able to buy it, get it and move on with your life. Today it is not a supply chain experience.”

According to him, Amazon Business is an alternative to employees traveling to Home Depot or another retail store to buy goods at market prices. It offers business pricing.

Hospitals and healthcare systems use Amazon Business to source the roughly 20% of supply chain purchases that are non-contractual. This is not for medical supplies that normally go through the group purchasing organization.

“We are targeting that 20%,” Kopitke said. “Consumables, medical supplies, gauze pads, booties, curtains are not 20%. Office supplies, cleaning supplies, sanitary ware, rest room items are all good deals. 35% of their expenses.”

According to David Pennino, founder and CEO and Brain White, healthcare managing partner, LogicSource, hospitals tend to pay more for these non-clinical items than corporations that have contracts. That indirect cost difference, roughly 7 to 12 percent, is astronomical, Pennino says. That’s an amount that, if corrected, White said, could save millions of dollars a year for hospitals.

WHY IS IT IMPORTANT

Clinical supplies under the guise Food and Drug Administration approval must be found and bought, said Honore Villan. According to her, this is not what Oksner is looking for from Amazon.

Honoré Villan became Senior Vice President, Supply Chain Director and Director of Supply Chain at Ochsner Health System in 2019, less than a year before the COVID-19 pandemic put pressure on supply chain shortages in hospitals.

The pandemic has shown the flaws in what Koptike has called the 20th-century supply chain model.

“We have worked with healthcare providers and understand what doesn’t work,” Kopitke said. “We have heard more than ever from our customers that they are unhappy with their traditional supply chain partners. They feel like they’re out of the pandemic… but they don’t see change happening.”

Oksner has already partnered with Amazon Business. Honore Villan is on the Amazon Business Health Advisory Board.

“For me, when Covid hit here in New Orleans, it started to spike early,” she said. “At that time, I had not been here for a whole year. It was definitely quite difficult. I relied on the power of the network and my team. We relied on supplier partners, manufacturing partners to get what we needed.”

According to her, Amazon Business continues to work successfully.

“I challenge them all the time,” she said. “Last year (hurricane) Ida devastated areas like Bayou; electricity and transport were cut off. We decided to do everything in our power to help the affected communities.”

In less than a week and a half, she said, thanks to donations, travel and orders, they were able to deliver three trucks loaded with tarps, food, baby and pet supplies, diapers, toiletries and other items to the communities.

BIG TREND

Amazon’s B2B division has 92 of the top 100 US hospitals as customers, Koptike said.

“We help hospitals at the headquarters level,” he said.

There are no start-up fees, and Business Prime helps cover shipping costs.

“The pandemic has accelerated our growth,” Kopitke said, “and we continue to grow.”

Twitter: @SusanJMorse
Write to the writer: [email protected]