Amazon Entering Healthcare and Disruption — Lessons from Reprocessing in an Entrenched Supply Chain

Amazon Entering Healthcare and Disruption — Lessons from Reprocessing in an Entrenched Supply Chain

Much attention has been given to the announcement that Amazon would jump into the healthcare supply market.  Amazon, with Berkshire Hathaway and JPMorgan, intend to reduce healthcare costs for the companies’ employees.  Modern Healthcare has reported what is now known about their supply chain efforts.  We also know, as CNBC has since reported, that Amazon has already shelved plans to sell drugs to hospitals.  “Instead, the company is focused on selling less sensitive medical supplies to hospitals and smaller clinics ….. and it has found that business to be more challenging than expected.”

CNBC further notes, “the setback illustrates the challenges of getting into the medical supply and pharmaceutical space, even for a company as big as Amazon…..The health-care supply chain is well-entrenched and will be hard to break into….”

If a giant, disruptive and wealthy company like Amazon can’t easily change the healthcare supply chain, who can?  Those in the healthcare industry know how convoluted the supply chain can be. One recent news story reports on a survey of healthcare professionals regarding the venture by Amazon et. al.:  “Of healthcare professionals surveyed….. 73% expect it to take longer than expected, with 25% saying the companies ‘have no idea what they’re getting into.’”

The regulated, professional medical device reprocessing industry knows a thing or two about disruption . . . in the medical device segment.  And while we help save hospitals nearly a half billion dollars a year, there’s a long way to go. Fundamentally, AMDR and its members see that a paradigm shift must take place in the way hospitals and medical device companies do business.  Right now, device companies generally make more money when they sell more… and hospitals, patients and consumers pay the price — indeed, the highest prices in the world.  This pattern must change.  Having played a key role in the establishment of the reprocessing business over the last 20 years, AMDR sees the next phase of our contribution to healthcare to lead the medical device industry in a focus on value

Reprocessing as a critical component healthcare delivery. When hospitals optimize their device utilization, including by reprocessing the instruments they already own, they limit the amount of new devices they need to buy, limit their dependency on that medical device sales rep and at the same time, reduce costs, reduce waste, and waste disposal costs.  This focus on extending the value of the assets hospitals already own drives down the cost per use of medical devices and frees up resources, allowing hospitals to improve patient care in other areas.

So we’re watching what Amazon does.  The future of healthcare requires the medical device industry to enter into this new paradigm where the focus is on providing value over one-sided profit goals.  We believe device firms that align themselves with the needs of healthcare providers will fare better in the market and we therefore urge manufacturers to consider reprocessing as an integral element in medical device technology development and marketing.  

By | 2018-10-03T12:58:12+00:00 October 15th, 2018|Blog|0 Comments