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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: Amazon.com, 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 krussell@hpnonline.com


Senior Editor Rick Dana Barlow rickdanabarlow@hpnonline.com


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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


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4 March 2018 • HEALTHCARE PURCHASING NEWS • hpnonline.com


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