Health system leaders continue to face enormous operational and financial challenges, and to help alleviate these pressures, they need more contribution from the supply chain. However, the traditional healthcare supply chain players continue to offer the same outdated, ineffective models despite lots of talk about transformation.
To gain a greater perspective on what is needed to transform the healthcare supply chain, Becker's Hospital Review spoke with Bill Kopitke, General Manager and Head of Healthcare at Amazon Business. Mr. Kopitke shared his perspective on pain points in health system supply chains and gaps in today's solutions, and elaborated on what Amazon Business customers are requesting and how they are helping tens of thousands of providers improve their procurement processes and reduce their spend.
"The pain points for Health Systems are common and well known," Mr. Kopitke said. "Historic margin pressure from the inflationary environment, workforce shortages and dissatisfaction, consistent rotation of supply backorders and allocations, the need to unify the health system bridging acute and non-acute, etc. All while working to evolve care to be more convenient and consumer oriented with digital interfaces and home care," he said. "Yet it's unclear how the supply chain is transforming at all to significantly aid these provider priorities."
The COVID-19 pandemic sent a shockwave throughout the entire healthcare industry, especially with its supply chain that visibly underperformed putting lives at risk. The executive exposure to supply chain failures led to the belief that lessons from 2020 and 2021 would result in meaningful changes for 2022 and 2023. "There was a lot of good talk that now is the time to do things differently," Mr. Kopitke said.
But based on extensive conversations with health system and supply chain leaders, Mr. Kopitke has heard a theme. "It's mostly the same structure — nothing is fundamentally changing," he said. Everyone said we have to learn from what we experienced in the pandemic," Mr. Kopitke said. "For all of the priority initiatives I mentioned earlier, we've got to do better . . . but it's pretty evident from our customer interactions that they look at who is traditionally involved in the healthcare supply chain and they say, 'You're just doing the same thing.' It's insane to expect a different outcome."
Not only do providers need costs lowered, they need to reduce risks and improve the workforce experience. They need better transparency about availability, prices, ordering, and quality outcomes. "The ongoing opaqueness that exists within the supply chain today is frustrating," Mr. Kopitke said.
"…it's pretty evident from our customer interactions that they look at who is traditionally involved in the healthcare supply chain and they say, 'You're just doing the same thing. It's insane to expect a different outcome.' ”
These pain points and the lack of change is driving health system supply chain leaders to look for new approaches and models. Mr. Kopitke identified three types of changes he sees health system and supply chain leaders pursuing
Amazon's culture is characterized as creative, innovative, and customer-obsessed, especially with consumer supply chain. Amazon is bringing this culture and tech-forward innovations to healthcare. Mr. Kopitke pointed out that for all of the talk about consumerism in healthcare, the spirit of consumerism has been lacking in the healthcare supply chain. Amazon intends to change that.
While retaining Amazon's familiarity, intuitiveness, and ease of use, Amazon Business has added features that apply to businesses and that are valuable for healthcare buyers. These features include:
"How providers are adopting our online stores and the transformation that is organically occurring is almost under-appreciated," Mr. Kopitke said. "The technology bringing options, transparency, and data has just not existed on the B2B side or in the healthcare space." What is under-appreciated is how many types and sizes of providers and their various staff that now have real-time, transparent data about availability, price, and supply options. "It's the democratization of the supply chain in healthcare."
"What is under-appreciated is how many types and sizes of providers and their various staff that now have real-time, transparent data about availability, price, and supply options. It's the democratization of the supply chain in healthcare."
Initially, healthcare organizations leveraged Amazon Business for "tail" spend, which is buying outside of negotiated agreements. For a product needed in a health system, a team member might have considered finding it on Amazon. Supply chain leaders were unaware that hundreds of users within their health system were possibly using Amazon Business already. This realization is leading health systems to be more intentional about their Amazon Business corporate account to ensure the right configurations and use are happening.
Then, the pandemic changed things. Within one year, over 100,000 healthcare organizations were purchasing all types of products, including medical supplies, through Amazon Business. Quickly, healthcare organizations began to buy entire categories of products through Amazon Business, such as office supplies, IT peripherals, and maintenance, repair, and operations. "We began winning that business and becoming the primary supplier," Mr. Kopitke said.
Health systems are now approaching Amazon Business with their bulk buying needs to see how we can be an alternative source from traditional players to aid with resiliency, cost savings, and delivery enhancements. "While we are still growing our medical supply storefront, it's clear that both buyers and sellers prefer a new forum and are ready to diversify."
Among further changes, Mr. Kopitke envisions "death of the RFP" and greater pricing transparency. RFP processes are static and inflexible. Amazon Business allows organizations to change what they need to buy as their needs change. "Yes, you're going to go through RFPs in certain categories, but in commodity categories, you don't need a whole item master and don't need a negotiated contract," he said. "This reduces the administrative burden, and is a game changer, resulting in greater speed and flexibility."
Because of the cost pressure and supply disruptions in healthcare, supply chain and procurement leaders are desperately searching for better models. To date, existing industry supply chain players have not delivered the meaningful changes that health systems need.
Amazon Business has a long history of innovating and disrupting purchasing processes on behalf of customers. In healthcare, the digital tools and features that Amazon Business provides will produce operational, financial, and clinical benefits. Operationally, improved purchasing tools and processes will drive transparency, efficiency, and greater spend control. Financially, Amazon Business will help health systems reduce the total cost of care. Clinically, Amazon Business will help improve patient care by reducing staff time on manual administrative tasks and options. This innovation for healthcare supply chains is one part of Amazon's broader industry contributions to improve healthcare and lower costs. "There will be many exciting innovations ahead for the healthcare industry; that, we all want," Mr. Kopitke said.
This article originally appeared in Becker's Hospital Review
What Amazon Business can do for your healthcare organization
We'll translate the most important information for your browsing, shopping, and communications. Our translations are provided for your convenience. The English version of business.amazon.com, including our Conditions of Use, is the definitive version. Learn more
More languages are available from other Amazon websites.