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Amazon plans to reform the marketplace for medical supplies

Written by Diane Archer

Amazon appears to be using its enormous power and reach to become a serious player in the multi-billion dollar health care marketplace. According to Bloomberg News, Amazon plans to reform the marketplace for medical supplies, building relations with big hospital chains and other provider groups, squeezing out distributors, and increasing its sales of bandages, latex gloves and other health care products. The move may be a first step towards a deeper dive into the bigger and costlier medical device and prescription drug business. How Amazon will transform the health care marketplace over time is anyone’s guess.

Amazon already sells a small array of medical supplies. It now intends to expand that business significantly and sell a host of medical supplies directly to doctors, outpatient clinics, and, over time, to large hospital systems. It is building new technology to enhance the buying process for health care providers and allow comparison shopping. Traditionally, health care providers have entered into contracts with distributors for bulk purchases of medical supplies.

According to the Wall Street Journal, Amazon is making security and safety a priority. Amazon has to persuade hospitals and clinics that purchasing medical supplies through its new channels makes sense financially as well as practically. If it can, it may be able to take over market share from the biggest distributors today, cutting them out of the process and bringing down health care costs.

And, if successful, Amazon may increase its revenues substantially. Northwell Health in New York, one of hundreds of large hospital systems in the US, spends $3 billion a year on supplies, contract services and pharmaceuticals. Between 20 percent and 30 percent of that cost is for administration, marketing and shipping.

At its best, Amazon would make it cheaper, safer and easier for both health care providers and patients to order health supplies. Time will tell.

Amazon’s foray into health care already is putting competitive pressure on health insurers and pharmacies. Just recently, Amazon partnered with Berkshire Hathaway and JP Morgan Chase to improve quality and reduce health care costs for their employees. It also appears to be gearing up to sell prescription drugsit has received approval for a wholesale pharmacy license in 12 states.

Here’s more from Just Care:


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