The Spheres, full of plants and trees, form part of Amazon's new Seattle HQ © PA Images
The Spheres, full of plants and trees, form part of Amazon's new Seattle HQ © PA Images

Amazon bids to become major healthcare supplier

15 February 2018

Amazon is looking to expand its Amazon Business marketplace and launch a larger offering in the US medical supplies business.

The e-commerce giant said the medical supplies market is one of a growing number of businesses it is working on developing.

“With medical supplies specifically, we hear from both healthcare manufacturers and healthcare customers that they want to find ways to simplify purchasing and reduce costs as a means to address systemic issues that take away focus from patient need,” it said.

“Many large health systems have numerous satellite facilities and as care shifts closer to the home, they need to address gaps and invest in new ways to simplify supplies moving to locations beyond the hospital.” 

Amazon Business, Amazon’s B2B marketplace, already has a small offering of medical supplies, including gauze, syringes, medical gowns and masks.

Amazon said it is building technology to serve healthcare customers and seeking to sell to hospitals on a “marketplace concept” that differs from typical hospital purchasing, which is conducted through contracts with distributors and manufacturers. 

Chris Holt, leader of global healthcare at Amazon Business, said Amazon would not look to imitate established models already used in the medical supply sector. 

“Our goal is to be something new – we’ve been actively building out new capabilities and features to simplify purchasing,” he said.

“We’re thinking about not how we can go mimic what’s already out there but rather how we can rethink safety and security of anything clinical.”

Brian Tanquilut, an equity analyst at the investment firm Jefferies, told the Washington Post that Amazon’s move to sell commodity medical supplies was a good entry point for them because it does not involve complex regulatory approvals and many states do not require a license at all.

“They [Amazon] see healthcare as a very big market; it’s one of the growth markets in the economy that they do not have a toehold in,” he said.

“They look at areas where it’s relatively easy to get into without high-level government-level scrutiny and this is the kind of the low-hanging fruit in the healthcare industry.” 

He added that Amazon has been particularly aggressive in courting dentists and setting up booths at dental conferences.

Amazon has recently ramped up its moves to become a major healthcare supplier. In October, several state pharmaceutical boards approved the company as a wholesale distributor, which is a necessary first step towards Amazon selling medical equipment.

Last month, Amazon, Berkshire Hathaway and JP Morgan Chase announced they were partnering to form a healthcare company to cut health costs and improve services for employees.

In late January, Amazon invited hospital executives to its Seattle headquarters to go over ideas for expanding Amazon Business into one where hospitals could buy supplies for outpatient locations, operating suites and emergency rooms, according to the Wall Street Journal.

The report added that Amazon has also joined with a large midwestern hospital system to conduct a pilot programme to test whether they can order supplies for 150 outpatient locations. 

A hospital official overseeing the endeavour said the pilot is customised for the hospital’s catalogue of supplies, which allows employees to compare prices against those in the Amazon Business marketplace. 

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