Earlier this month we held IDN Insights West at Amazon in Seattle, Wa. It was a unique venue in what Amazon calls “Amazon One” which is one of the main Amazon buildings in downtown Seattle. The day opened with a key note by Chris Holt from Amazon then we moved into our more traditional supply chain discussions. You can see upcoming events here https://www.jhconline.com/events.
I thought I would share some quick highlights from the speakers at the meeting. So here are 16 quotes I captured during the meeting, give it a read and let me know what you think!
Chris Holt
Leader, Global Healthcare
Amazon Business
1. 55% of online buyers start at Amazon, the other 45% go everywhere else.
2. One of Amazon’s Leadership Principals is to Invent and Simplify.
3. Amazon is the earths most customer centric company focused on 3 tenants; Price, Selection and Convenience.
4. J-WO (pronounced Jay-Wow) is coming. Just Walk Out technology. It is being piloted with Amazon Go and you can expect to see what you see in the consumer setting come to Amazon Business like J-WO, Alexa and Echo dot.
My thoughts– Chris’ presentation was absolutely fascinating and very eye opening to the over 125 suppliers in attendance. Very few of the attendees knew Amazon Business can load contract pricing and can accept payment on invoice like traditional medical distributors. This is obviously disconcerting to distributors but I really don’t think Amazon is scaling up to target distribution.
I think they are truly a marketplace that has buyers and is adding sellers, rapidly. I think many of the suppliers that are resistant to wanting to collaborate with Amazon need to consider their customer and how the customer wants to buy. Certainly, the Millennial buyer of tomorrow is going to want to swipe, swipe-click.
I am not saying this will be fast or easy for Amazon but I think all suppliers to healthcare will have to change, and quick to meet the buyer of tomorrow where that buyer wants them.
Tom Harvieux
Vice President Supply Chain Management
Sanford Health
5. Presenting after Amazon is like being in 4th grade and following a kid in show and tell who’s uncle is an Astronaut.
6. We are a service delivery model, we ask our customers everyday would you use us if you didn’t have to?
7. When a system deploys protocol driven contracting the formulary takes care of itself.
My thoughts– This is the first time I have seen Tom present and I am now a big fan. He was funny, concise, and insightful. If you get a chance to see him in the future I recommend you do!
His comments about asking his customers if they would use him if they didn’t have to really made a buzzer go off in my mind. I really think this mind set is what best in class systems are doing as they move to a category management model and are morphing into a service organization for their internal customers. I think this will start to make benchmarking a big part of how they measure their success and make them measure against best in class…. not just best in healthcare.
I can see the day where organizations like the one Tom runs at Sanford will want survey results to reflect satisfaction results from Nordstrom, Ritz Carlton, and BMW not just on par with Mayo, Geisenger or the Cleveland Clinic.
Jim Wetrich
President/CEO
The Wetrich Group
8. Remember the patient!
9. Drucker states there are 2 basic functions of business; Marketing and Innovation. Everything else is a cost to the organization.
10. The Economy is based on connections and the coordination, trust, and permission of those connections. Connections are an asset.
11. GPOs will remain relevant and valuable to Providers because of the value Pharmaceutical contracts provide.
My thoughts-Jim had a great way to bring to life his 35 years’ experience in healthcare on all three sides of the desk as a former GPO, Supplier, and Supply Chain executive. Very few people have been so successful as a leader for those very different stakeholders.
Jim did a very heart touching tribute to John Burkes who is obviously missed dearly by so many. It is nice to see people still make such a big difference in each other’s life even in these confusing and hectic times.
Jim’s comments on GPOs are very practical and I agree with him completely and I think the data backs him up. The hospitals and IDNs certainly see value and are voting with their dollars so I too think GPOs are here to stay. Hospitals see a great deal of value in the GPOs Pharmaceuticals contracts which Jim believes is the key driver that will keep GPOs as trusted partners in the supply chain. They certainly will continue to adapt and change to what their customers need so the GPOs of tomorrow may look different than the GPOs of yester year.
David Hargraves
Group Vice President Strategic Sourcing
Premier Inc.
12. Does Supplier consolidation increase or decrease the cost of care? It increases the cost of care by reducing competition, increasing market share making the supplier a price maker not price taker.
13. Supplier Consolidation is a bit of an arms race driven by macroeconomic drivers that aren’t changing.
14. You know how many GPOs are out there? 400!
15. How many Health Systems will there be in 2020? 75-125 is the most common number I hear.
16. The caliber of the Supply Chain Leader is changing drastically!
My thoughts– David is absolutely one of my favorite presenters around the healthcare supply chain. If you have not seen him present I urge you to find a way. He is one of those rare people that can simplify extremely complex topics. Furthermore, he is never afraid to take on the tough topics.
His insight into consolidation is interesting to me. Everyone is seeming to chase scale and the unintended consequence to me is always the fun part to watch. Systems get bigger so they can negotiate with payers but suppliers then get leveraged for better savings for bigger pieces of business.
David made it very clear that Supply Chain Leaders are changing…and fast. It is very clear the skills Materials Managers had 10 years ago are not the skills that will allow them to survive the next 10 years.
Thanks for sharing your insights and “ah-ha” moments from this conference. Impactful to me was David Hargraves observation of differences in Suppliers, “price makers or price takers”. Just like IDN consolidation there will be drastic changes in the Supplier landscape. Better to work for a “price taker” than to be bought by one and let go.
Correction, better to work for a “price maker”
Thanks David!
Great review John!
Thanks Jim! I appreciate you following!
Tom Harvieux’s question “Would our customers use us if they didn’t have to?” was fantastic. Also, I’m looking forward to the next podcast!
I agree that Tom Harvieux’s question “Would our customers use us if they didn’t have to?” is a question we should all be asking in our respective organizations. Gone are the days of “we’re the only game in town”. Customers want partners that provide value and not just a good price.
Umm, at #3 it is: Amazon is the earth’s most customer-centric company focused on 3 TENETS: Price, Selection and Convenience.
Great insights John. Makes me think Amazon may start focus on non-acute since becoming a distributor is not their vision at this point. Non-acute customers have limited product needs compared to the large Acute care settings so the point and click ordering option may be more conducive there. Will be interesting to see.