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In E-Health, MedAssets Bulks Up

Executive Summary

This latest acquisition by e-health's MedAssets underscores how important established players like GPOs are in promoting an Internet-enabled hospital supply chain. In fact, MedAssets was arguably the first major e-health player to recognize that GPOs are not only vital for the base of customers and suppliers they bring, but can also be attractive sources of revenue.

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E-Health's Second Mover Advantage

The revolution that the Internet is bringing to hospital supply is really two revolutions, one transaction-oriented, the other information-based. MedAssets hopes to capitalize on opportunities in the transaction-based realm by, in effect, applying Internet technology to two relatively traditional service businesses, group purchasing, and capital equipment refurbishing and resale. MedChannel, by contrast, is trying to create an infochannel that promotes wide efficiencies across a broadly defined supply chain, from OEM to end user. Both companies face a challenge: that of coming late to a B2B e-commerce market that is evolving rapidly. Their hope: a kind of "Second Mover Advantage", under which the early B2B leaders open doors to customers that both companies can more easily walk through.

E-Health's Execution Play

Combining the benefits of a disciplined hospital system and a leader in e-commerce, the new joint venture between Tenet and Chemdex hopes to create a differentiated offering in e-health. The new company has the ability to integrate the hospitals and suppliers Tenet/BuyPower represents, thus providing the critical mass that e-commerce companies have, until now, lacked. But company officials insist that their real advantage is that they offer a different approach to e-commerce, one that focuses on an end-to-end solution tied to the hospital's ERP system, rather than simply a web site to make ordering and inventory management more efficient.

Internet Specialty Delivery

For manufacturers of low-volume, specialty supplies, who have been largely disenfranchised by recent trends in hospital purchasing, a number of new Internet companies offer solutions to problems ranging from logistics integration to product information overload.

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