For the past year, hospital purchasing groups have been under a spotlight, as Senate investigators and major media investigate charges that groups have done more harm than good in favoring large product companies. One of two groups at the center of the crisis, Premier, says it is cleaning up its act-and even hired an ethicist to help-but its take on necessary reforms embraces a broad, big-picture view of hospital/GPO relationships. MedAssets is taking more of a back-to-basics approach that stresses flexibility and choice in contracting options while helping members address the escalating costs of physician preferred products. The challenge for GPOs: the pressure to reform comes at a time when competition for hospital customers is fierce, in part because the financial pressure on hospitals has never been greater.

The real source of first-mover advantage, much extolled in the dot com world and among the advocates of unfettered innovation, is as often luck as it is vision. The problem is that, when these major strategic moves fail--and most of them do--there's no inexpensive way to retreat.

Global Exchange was set up last winter by five of the largest med-surg companies to make sure they had a role in shaping the future of e-commerce and hospitals. For several months it was reticent but now its new general manager is explaining its mission to provide a single centralized portal for e-procurement to hospitals and integrated delivery systems that results in greater efficiency and savings for hospitals. A major reason for its formation was the concern that established, private-investor-led dot.coms, such as Medibuy and Neoforma.com, were trying to squeeze manufacturers. But the Global Exchange raised concerns among the very manufacturers it was set up to protect--for example, how it would handle competitors and whether each member get the same terms as the others. The exchange has five founding partners, but it is open to all, and all suppliers pay a subscription fee, based on the volume of business they do through the exchange. So far, 40 hospitals have signed up to use the system, which will go on line this fall and the system offers more than 60% of all med-surg supplies on the market. While dot.coms have taken a beating in the stock market in recent months, the Global Health Exchange says it isn't beholden to Wall Street because it has no plans to go public. It is in this business for the long-term, despite the ups and downs of competitors.