GHX Becoming a Big Deal

Edition: January 2002 - Vol 10 Number 01
Article#: 1137
Author: Repertoire

Like a snowball that keeps getting bigger as it rolls down the hill, the Global Healthcare Exchange continues to attract disparate elements of the supply chain with each passing month. Consider all that's happened in the last half year:
-At the end of August 2001, GHX and Neoforma Inc. (the designer of Marketplace @Novation, the e-commerce solution for members of the Novation purchasing organization) announced they would pursue an ''integrated e-commerce solution'' for suppliers and providers.
- In mid-November, GHX and AmeriNet, the St. Louis-based purchasing group, announced that they had formed a ''strategic working alliance'' to provide an electronic environment for healthcare e-commerce.
- Later in November, GHX and HealthNexis, the e-commerce provider founded in April 2000 by four of the country's biggest distributors and wholesalers, announced that they would combine their operations into a single Internet-based exchange.
Not surprisingly, GHX President Mike Mahoney heralds the developments as good news for the supply chain, predicting a single source of connectivity for the entire industry. Will it come to pass?

Neoforma Relationship
Work continues on developing an integrated solution for Novation members and GHX, say Neoforma's Andy Pitler and GHX's Kurt Blasena, who are charged with pulling it off. As it was announced in August, the alliance between the two companies was intended to enable Neoforma's hospital customers to use its Marketplace@Novation system to transact business with GHX's network of suppliers, currently numbering about 100. Meanwhile, GHX's suppliers will be able to sell their products to Neoforma's current and future hospital customers through one Internet-based exchange.
According to Pitler, the integrated solution is both ''simple and elegant,'' in that it brings together the strengths of Neoforma and GHX. For example, GHX has been able to avoid spending time and money developing interfaces with Novation hospitals by using Novation's front-end system. On the other hand, Novation has avoided the cost of integrating into its system the suppliers that already had connections with GHX.
Just as important, Novation members now have the benefit of the ''breadth and depth'' of GHX's supplier catalog, called AllSource, in addition to their own Novation contract catalog. The result, says Pitler, will be clean orders for suppliers and clean order acknowledgements for buyers. In addition, Novation hospitals will be able to use e-commerce to connect with the hundreds or even thousands of vendors with whom they currently order by phone or fax.
As of press time, one hospital- Willis-Knighton Health System, Shreveport, LA., had successfully placed an order through Marketplace@Novation to a supplier on the GHX system, Summit, NJ-based Aircast. ''We're excited about the momentum we're generating,'' says Pitler. ''We're focusing on our message to providers and suppliers: It's about connectivity and reduced costs for everybody.''
''Our two organizations are culturally aligned,'' adds Blasena. ''That's the biggest catalyst for making this partnership successful, and it allows us to stay focused and to collaborate with each other.''

Just three months after announcing its alliance with Neoforma, GHX gained the public confidence of AmeriNet. In essence, the St. Louis-based GPO endorsed GHX and recommended to its members that they use it as their e-commerce provider. There is no financial relationship between the two organizations.
It wasn't the first time AmeriNet had dipped into the e-commerce waters. In April 2000, the GPO announced its intent to merge its purchasing program with Broadlane, which contracts on behalf of a number of groups, such as Tenet Healthcare. As part of that agreement, AmeriNet members would have used the Broadlane e-commerce system. However, AmeriNet and Broadlane called the merger off later that year, due to an inability to come to terms with how it would be structured. The e-commerce deal was abandoned as well.
AmeriNet President Bud Bowen says that his GPO has been interested in GHX for awhile. From the beginning, GHX represented ''true efficiency,'' not merely a play for stock market gains, says Bowen. ''It represents major manufacturers coming together and pooling their resources to create a single solution rather than individual ones,'' he says. ''That is fundamentally more efficient than if each had developed the capability to conduct e-commerce with thousands of customers.''
Although GHX isn't the ''total solution'' in that it doesn't represent the entire universe of suppliers, it's still ''pretty significant,'' says Bowen. ''If a hospital were able to integrate its materials management information system with GHX, it could accomplish a pretty good piece of what has to be done.'' [When Repertoire spoke with Bowen, GHX's merger with HealthNexis had yet to be publicly announced. However, anticipating the merger, Bowen said it would only enrich the offering for AmeriNet members.]

The merger with HealthNexis could be all that GHX needs to bring it over the top. By bringing together national wholesalers and distributors with GHX's list of participating med/surg manufacturers, the merger makes GHX the most comprehensive ''go-to'' portal for health care buyers. Operations for both will be combined at GHX's corporate headquarters in Colorado, with a combined work force approximately 10 percent larger than GHX's current work force, according to GHX President Mike Mahoney.
HealthNexis, formerly the New Health Exchange, was founded in April 2000 by Amerisource Bergen Corp., Cardinal Health, Fisher Scientific International and McKesson Corp.
In the next few months, teams from both companies will work together to integrate the following pieces:
--Product catalogs. While GHX was developing its AllSource catalog (with approximately 200,000 SKUs), HealthNexis was working on its Product Data Manager. They will be combined into one industry standard catalog. And the information in it will be up-to-date and verified on a continual basis by suppliers, says Mahoney. No more multiple catalog numbers for the same product, no more different descriptions, no more different pricing, says Mahoney.
--Contract management systems. With its Contract Data Manager, HealthNexis had proceeded further in contract management than had GHX, with its MemberSource exchange platform. ''It has been in the GHX vision, but we hadn't developed a lot of resources in this area,'' says Mahoney. Contract management keeps straight such information as who's eligible for what contracts, what pricing are they eligible for, etc.
Pitler, Basena, Bowen and Mahoney all expect the events of the past six months to bring the industry closer to the Holy Grail-- a single point of connection between providers, distributors and manufacturers. The result, they hope, will be better, more frequent and error-free communications and transactions. Now the industry must wait to see if they can make the vision a reality.