SKU’d Bootstraps bingo

Many people may be familiar with the American idiom, “pull yourself up by your bootstraps” as a rally for improv- ing a situation or solving a problem by one’s own hard work. Efforts can be arduous, even a gamble. (As an aside: Apparently, that phrase emerged in the 19th century originally to describe someone as being delusional about accomplishing some ludicrous task.) In January, two proposed bootstraps business deals

surfaced that seemed to qualify.

First up: Three prominent integrated delivery networks detonated an idea to jump into the pharmaceutical business with the aim of driving drug prices down. Execu- tives from the three provider organizations offered few details on what and how exactly they planned to do this. If anything, they succeeded in controlling the media cycle’s game of speculative musical chairs for a couple of days and even convinced short-sighted profi teering opportunists on Wall Street to dump on key Big Pharma stocks. Not surprisingly, those share-price dips were short-lived. Certainly, the possibilities of provider-based organizations overseeing their own supplier source pique curiosity in a way not felt since HCA tried to merge with American Hospital Supply in 1985 until VHA served as an economic “voice of rea- son.” AHC accepted Baxter Travenol Laboratory’s subsequent merger offer instead. Scores of unanswered questions remain that the IDN Trio’s executives publicly

acknowledged. Would they physically launch a manufacturing company that would produce private-labeled generic products? Or would they buy an existing generic drug manufacturer? Or simply partner with a generic drug manufacturer or sev- eral? Are they tacitly conceding that not even committed cooperative buying has succeeded in controlling and thwarting price infl ation? Next:, Berkshire Hathaway and JPMorgan Chase announced they

were forming some kind of tech-savvy company to deliver “simplifi ed, high-quality and transparent” care to benefi t their U.S. employees, their families and potentially, all Americans, according to Chase Chief Jamie Dimon, and also to combat what Berkshire’s sardonic sound byte master, Warren Buffett called “a hungry tapeworm on the American economy.” Sure, the Houses of Jeff Bezos, Buffett and Dimon may be fl ush with resources but their collective declaration should grant healthcare organizations a hefty (and temporary) sigh of relief. Apparently, Amazon’s not going to disintermediate dis- tributors and GPOs after all (See “Resilience parries with relevance” story on page 10), at least for now. Further, all the reconnaissance at the supply chain conferences and trade shows and research into healthcare policies and regulations merely rep- resented a baseline for this new venture that may have frightened off billions of dollars in the stock market with the announcement, but drew curious responses from fi nancial analysts who either worship or grouse about the Triple Crown of Corporate America’s royal family. Of the two proposed deals, the latter offers a better shot at seeing reality even if

it culminates as a short-lived excursion. For one, Bezos bought a national newspa- per and a grocery store chain after pundits pooh-poohed his predilection for both. Don’t count Amazon out just yet. Buffett remains the X factor and could just as well invest in a successful hospital company like HCA or smaller competitor(s). Dimon represents the bank vault. What’s the key challenge for the former? If the IDN Trio merely partners with a

manufacturer then they’re just coalescing into another GPO. But if they buy or launch a pharmaceutical manufacturer then they open themselves up to catastrophic and stratospheric liability and risk. How? When any negative healthcare treatment out- comes emerge, lawyers and the media typically target companies with the deepest pockets to blame, onto which affected patients and the public quickly latch. Provider- based organizations likely could not afford, let alone cost-justify, such a fi scal load. Now if the IDN Trio wanted lower drug prices than even the GPOs could deliver, why not simply work hard, have fun and make history by inking a contract through Amazon Prime?

EDITORIAL Publisher/Executive Editor Kristine Russell

Senior Editor Rick Dana Barlow

Contributing Editors

Managing Editor Valerie J. Dimond (941) 927-9345, ext. 202 Kara Nadeau Susan Cantrell

ADVERTISING SALES East Coast Blake and Michelle Holton (407) 971-6286

Midwest Donna Boatman-Riley (815) 393-4624

West Coast Blake and Michelle Holton (407) 971-6286

ADVERTISING & ART PRODUCTION Ad Contracts Manager Tiffany Coffman

(941) 927-9345, ext. 203 Graphic Design Tracy Arendt


(941) 927-9345, ext. 201 CORPORATE President Kristine Russell

Healthcare Purchasing News (ISSN: 1098-3716) is published monthly by KSR Publishing, Inc., 2477 Stickney Point Road, Suite 315B, Sarasota, FL 34231, Phone: (941) 927-9345, Fax: (941) 927-9588,, Business hours: 8:00 a.m.-5:00 p.m. EST.

EDITORIAL ADVISORY BOARD Joe Colonna, Vice President, Supply Chain, Piedmont Healthcare, Atlanta, GA; Karen Conway, Executive Director, Industry Relations, GHX, Louisville, CO; Michele DeMeo, CRCST (Ret.); Dee Donatelli, RN, CMRP, CVAHP, President and CEO, Mid-America Service Solutions LLC, Overland Park, KS; Mary Beth Lang, Executive Vice President, Cognitive Analytics Solutions, Pensiamo, Pittsburgh, PA; Melanie Miller, RN, CVAHP, CNOR, CSPDM, Value Analysis Consultant, Healthcare Value Management Experts Inc. (HVME) Los Angeles, CA; Dennis Orthman, Associate Executive Director, Strategic Marketplace Initiative (SMI), Westborough, MA; Richard Perrin, CEO, Active Innovations LLC, Annapolis, MD; Jean Sargent, CMRP, FAHRMM, FCS, Principal, Sargent Healthcare Strategies, Port Charlotte, FL; Rose Seavey, RN, BS, MBA, CNOR, ACSP, Seavey Healthcare Consulting Inc., Denver, CO; Richard W. Schule, MBA, BS, FAST, CST, FCS, CRCST, CHMMC, CIS, CHL, AGTS, Director, Clinical Education, STERIS Corporation; Robert Simpson, CMRP, Retired President, LeeSar and Cooperative Services of Florida, Fort Myers, FL; Barbara Strain, Director, Value Management, University of Virginia Health System, Charlottesville, VA; Deborah Petretich Templeton, R Ph., MHA, Chief of Care Support Services, Geisinger Health System, Danville, PA; Ray Taurasi, Principal, Healthcare CS Solutions, Washington, DC area

SUBSCRIPTION RATES U.S.: $74.00 for one year (prepaid orders only) Canada: $90.00 Foreign: $122.00

Single copies: $7.00 Industry Guide: $49.95

Special issues and back issues: $11.00 per copy, prepaid. Certain individuals qualify for free subscriptions.

CHANGE OF ADDRESS Subscribers: For change of address, send your old and new addresses to Healthcare Purchasing News, 2477 Stickney Point Road, Suite 315B, Sara- sota, FL 34231. Fax: (941) 927-9588, Email: Allow 4 to 6 weeks for correction. All other inquiries, call Tiffany Coffman at (941) 927-9345, ext. 203.

KSR Publishing, Inc.

Printed in USA • Paper manufactured in USA Soy ink made in USA • Keep jobs in USA


Copyright 2018 by KSR Publishing, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage-and-retrieval system, without permission in writing from the publisher. Healthcare Purchasing News is a registered trademark used herein under license. Offi ce of publication: Periodicals Postage Paid at Sarasota, FL 34242 and at additional mailing offi ces. Postmaster: Send address changes to: Healthcare Purchasing News, P.O. Box 17517, Sarasota, FL 34276-9801.

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82