would you describe your company?
was the company launched?
is Medical Supply Chain different from other dot-coms or the Global
healthcare providers mainly just interested in medical products? What
products can be accessed through Medical Supply Chain?
is your market penetration strategy?
large Group Purchasing Organizations have created strong partnerships with
and in some cases invested in E-Commerce companies. Does Medical Supply Chain
plan a similar strategy?
can you get hospitals to work with you if their GPOs-and in some cases IDNs
are marketing a competing e-commerce solution (i.e. Medibuy, Neoforma,
you try to force customers to standardize their products?
so many choices, why should the healthcare provider select Medical Supply
Chain as their supply-chain partner?
would you describe your company?
Medical Supply Chain (MSC) provides self-directed supply-chain services
designed to capture and manage usable data for the health system. The Company
foundation is built on demand principles, thus allowing Health system
material managers to more effectively manage their supply-chain and their
partnerships. MSC delivers value through a balanced approach that includes a sound
customer driven business model with a deep understanding of the healthcare
supply-chain landscape and the challenges that face today's Health systems.
was the company launched?
The company was officially launched May 30th, of 2000 and has completed its
R&D studies. The company's products and services indicate sizeable cost
reductions over existing manufacturer, distributor and GPO sponsored service
3. How is Medical Supply Chain different from other
dot-coms or the Global Healthcare Exchange?
Medical Supply Chain is health system centered; it exists purely for the benefit of the health
system. It is not a disguised store front for the selected few
manufacturers, GPO’s, and distributors who can afford to build management
programs then make claims about how much they are helping their customers
when they are really helping themselves a whole lot more. Similar to a
service company (Phone Company) our purpose is to provide services for our
customers, not control how they use the service. Does the Global
Healthcare Exchange (owned by a consortium of manufacturers and
distributors) really have the best interests of their customers in mind or
are they simply seeking to prevent competition similar to a cartel. Do the
GPO’s really have the best interests of their members in mind or are they
just trying to control the purchasing habits of their members while
maximizing administrative fee revenues for themselves. It seems all of the
existing self-interests are more focused on using their services to sell
products rather than seriously addressing the needs of the health system.
We operate on a pull model. Most existing service companies operate on a push model. The
ultimate goal of any service should be to increase efficiency and provide
the lowest possible cost of doing business. Most companies, if not all,
are focused on using technology to assist suppliers in pushing product
through the supply-chain. Suppliers and E-Commerce companies need sales
transactions to make money, which drives whatever the market will bear. In
fact, much of the management of these firms are drawn from product selling
organizations. The result of push is often too much inventory in the
health system possession, inconsistent and inaccurate utilization data,
and manufacturer production schedules that are misaligned with the health
system needs. Medical Supply Chain’s solutions provide many of the
elements already enjoyed by customers using MMIS or ERP systems. This
allows demand or pull to be created based upon actual consumption of
product thus minimizing product in the supply-chain, improving upstream
flow of data to synchronize manufacturing schedules with demand, and
improving cash flow for all links in the supply-chain. Our fees are based
upon the value delivered by our solutions and are not an arbitrary add-on
to whatever the price of a product.
Our revenue model is fair and value based. Most of the early dot.coms offered free services to
the buyer and expected the seller to pay for everything. Savvy buyers know
that getting something for nothing just does not happen. Whatever the cost
to the sellers is, buyers know that cost will eventually be passed on to
them. At Medical Supply Chain we respect the intelligence of health
systems. For that reason, we charge a simple monthly user fee per buyer.
Because our services substantially reduce total supply-chain costs for
health systems we apply a minimal value based fee for our services. Our
fees, which are spelled out in advance of the service covers the costs of
providing our solutions and is more than offset by the lower total
supply-chain cost enjoyed by our health systems customers. Using the phone
company analogy, the user fee represents the monthly service fee and the
value-based fee is similar to long distance that is billed based on usage.
Charging the buyer a fee not only respects their intelligence but it also
makes them a true partner with a vested interest in the success of their
supply-chain initiatives. We believe that this approach plus a valid value
proposition will create a superior rate of return for health systems.
Medical Supply Chain is the single solution for
all of the tangible goods purchased by the healthcare provider. Most of
the remaining dot.coms are largely focused on medical products mainly
because most of their management comes from a medical product sales
background. This is just more focus on pushing products. We believe that
true efficiency can only come from each healthcare provider having the
capability to access all of their product needs for their entire
organization through a single solution that the health system controls.
For this reason we facilitate all product categories through a Single
Source, Total Solution.
Aren’t healthcare providers mainly just interested in
medical products? What products can be accessed through Medical Supply Chain?
One of the challenges we have in the healthcare
industry is a lack of solid data in the area of annual spend by commodity.
We have extrapolated information from HIGPA and other organizations which
has shown that medical products may represent as little as 25% of the
annual non-labor spend of hospitals and health systems. It should be noted
that other sources have presented conflicting information. The other
products we are talking about are food, dietary supplies, laboratory
products, office products, computers and supplies, environmental service
products, MRO, and a host of other products, any tangible item purchased
by a healthcare provider.
What is your market penetration strategy?
initial phase of our market strategy entails customer education and
introduction to The Company’s products and services, as well as, the
benefits and value generated by them. MSC management has completed
extensive market research in this area and consulted with a wide audience
with overwhelming acceptance to our products and services. The Company’s
products and services offer many of the elements already utilized by
health systems managing business processes with Material Management
Information Systems (MMIS) or Enterprise Resource Planning (ERP) systems.
MSC products and service can bridge these systems or can be browser driven
independently through an interface for those health systems that can't
afford capital expenditures of IT development. These products and services
provide each individual health system with complete administrative control
over the services and function required to execute an efficient
supply-chain. The Company refers to this process as "Self-Directed
Several large Group Purchasing Organizations have created
strong partnerships with and in some cases invested
in E-Commerce companies. Does Medical Supply Chain plan a similar strategy?
There are no plans to duplicate the current GPO strategy. Like all links in
the supply-chain there is a legitimate role for the GPO provided they can
demonstrate a clear value to their customer. We plan to attract customers on
the value of our services. We are not a GPO. That is not our role. We do not
see a need for us to partner with a GPO and we do not see the need for a GPO
to partner with us. There seems to be wide agreement that there is financial
opportunity for anyone who can be in the middle of the purchase transaction.
When the GPOs and dot.coms started getting together many seemed to assume
that it was the dot.coms who needed the GPOs to provide them with customers.
In fact, the reason for these partnerships may have more to do with the GPOs’
desire to find a role for themselves in the purchase transactions of their
members. Creating contracts, which GPOs do, is quite different from creating
supply-chain efficiencies. It is quite possible that the GPOs needed the
dot.coms to ensure their place in the supply-chain.
The value of our products and services will present our customers with the
opportunity to reconsider their need for a GPO relationship. However, we
will not influence our customers to move in either direction and there is
no need for them to do so in order to utilize our products and services.
How can you get hospitals to work with you if their
GPOs-and in some cases IDNs are marketing a
competing e-commerce solution (i.e. Medibuy, Neoforma, Broadlane)?
not in competition with any link in the supply-chain including GPO's. Our
customers are free to use a GPO or not. It is their decision. If a GPO
member uses our services they will be free to report utilization
information to their GPO through our reporting capabilities. Health
systems will use our service only because it offers them the ability to
manage their supply-chain in an efficient and cost effective manner. We
are providing a service that facilitates supply-chain efficiencies and
reduces total supply-chain cost. We are not seeking to control the actions
or buying decisions of our customers. That is their prerogative and it is
not our place to interfere in those decisions.
Will you try to force customers to standardize
Standardization is important to the healthcare
provider. Fewer products to manage and fewer line items to buy will reduce
process costs and drive down product costs. We will encourage
standardization but it will be up to the customer to make his or her own
product standardization decisions. Only they will know the proper balance
between minimizing line items and meeting the needs of a diverse patient
population and clinical staff preferences.
With so many choices, why should the healthcare provider
select Medical Supply Chain as their supply-chain partner?
Value does not exist
just because we say it does. It exists because, our value is in the
products and services we provide for health systems. Our value is further
enhanced by our ability to keep costs low and dramatically improve the
return on investment for our health system customer. We have not spent
millions of dollars in development, start-up or large infrastructures;
therefore it is not necessary to overcharge health systems for the
services we provide. This allows for a much lower commitment of finances
for our company over many of the others. Our revenue model is built from
what is needed, not from what the market will bear. Health systems are the
direct beneficiaries of our commitment to be financially responsible and