Most healthcare execs hope Amazon expands supply chain presence
Amazon has already reshaped retail, and a new survey signaled that healthcare leaders are hopeful the company can do the same for their industry's supply chain.
The Reaction Data survey found that 62% of healthcare officials, including CEOs, directors of material management, directors of operations and directors of finance, are supportive of Amazon entering the market.
Respondents hope the company’s record of “low cost and quick turnaround” is transferred to the healthcare supply chain and 75% expect Amazon will be successful in making that move.
Amazon’s retail disruption has helped lead to the demise of some retailers and caused others like Sears and Kohl’s to partner with the online giant. At least some healthcare leaders are looking forward to Amazon expanding into medical supplies and causing similar disruption that results in lower prices and quicker deliveries.
“To say Amazon has disrupted the retail market would be an understatement," the company said in announcing the results.
"They have mastered the process of online shopping and next day delivery. Based on the responses we have received from those in the healthcare space, their play will be received with open arms.”
Amazon has not disclosed details about its healthcare plans, but The Wall Street Journal reported in February the company has been in talks with a major health system in the Midwest and has met with several hospital executives. Medical supplies are a major budget item for health systems, and Amazon is poised well for that area because it has already been selling some supplies and IT equipment to hospitals through its Amazon Business entity.
A little more than 60% of respondents to the survey said they believe Amazon will have a positive effect on healthcare. But while healthcare leaders are hopeful, the report acknowledges that Amazon will face difficulties moving into the healthcare supply chain.
“There will be rough waters to navigate. Healthcare can be bogged down with red tape," the report said. "(Group purchasing organizations) have dominated the supply chain for a long time. However, if Amazon is able to make a splash in commodities, which they already excel at, the market appears to be prime for more.”
Amazon’s move into healthcare is both worrying and exciting for healthcare companies. In addition to expanding medical supply delivery, Amazon has added a health and wellness team within its Alexa voice-assistant department. The team is looking to boost Alexa’s healthcare-related items and navigate HIPAA regulations. Amazon is also involved in a joint venture with J.P. Morgan and Berkshire Hathaway to lower employee health costs.
Dave Chase, managing partner and co-founder of healthcare investment fund Health Rosetta Group, recently told Healthcare Dive that now might be a great time for Amazon to get into healthcare.
“The oldest millennials are now leaving the invincible stage of their life and paying attention to healthcare,” Chase said. “They have zero loyalty to the status quo. Millennials are increasingly moving into management roles. Connect those dots and it's not hard to imagine how Amazon's focus will have devastating consequences for the equivalents of Borders and Barnes & Noble.”