Amazon’s Latest Ambition: To Be a Major Hospital Supplier

Rob Austin in The Wall Street Journal Inc. is pushing to turn its nascent medical-supplies business into a major supplier to U.S. hospitals and outpatient clinics that could compete with incumbent distributors of items from gauze to hip implants. Amazon Business already sells a limited selection of medical supplies — some sutures, for example, but not more specialized items like hip implants — as well as industrial and office supplies. 

Hospitals today typically sign contracts to buy supplies directly from manufacturers or from distributors, which include Owens & Minor Inc., Medline Industries Inc., McKesson Corp., and Cardinal Health Inc.

Also in the chain are companies known as group-purchasing organizations that negotiate on behalf of multiple hospital buyers, seeking to leverage collective demand. Hospitals formed and own a stake in many such groups. Fees and administration, marketing, and shipping costs account for an estimated 20% to 30% of health-care supply costs, according to a November research report by Citigroup Global Markets Inc. 

“There’s a lot of people with fingers in the pie,” said Rob Austin, an associate director with Guidehouse Inc. and former hospital supply-chain executive. “There is a huge opportunity.”

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