Stays Cool

Edition: March 2003 - Vol 11 Number 03
Article#: 1482
Author: Repertoire

Neoforma remains relatively unfazed by GHX’s recent acquisition of Medibuy. (See the February 2003 issue of Repertoire.)

“We’re out of the ‘deals-for-access’ business,” says Steve Wigginton, executive vice president of marketing, sales and services for San Jose, Calif.-based Neoforma. Racking up potential hospital customers doesn’t interest the company as much as increasing the number of actual customers – both providers and suppliers – and the services offered to them.

It was primarily for the latter reason that Neoforma acquired HPIS and med-ecom from MedContrax Inc. last July. (More recently, the company purchased Revelocity, Aliso Viejo, Calif.) Today, the company is convinced the acquisitions were the right way to go.

HPIS (Healthcare Products Information Services) collects almost 100 million lines of non-hospital sales data from distributors every year, then crunches it and sells it back to distributors and manufacturers, so they can evaluate the performance of their sales forces and measure market share. Data confidentiality and privacy are guaranteed.

“It’s very powerful market data,” says Wigginton, referring to HPIS. It lets the manufacturer answer many questions, including, “Which of my regions has the highest market share growth?” Distributors, on the other hand, can find out how much of Manufacturer X’s volume it represents. “It gives [distributors] the ability to benchmark themselves against other distributors,” says Wigginton.

med-ecom provides subscription-based contract management and administration products and services, including the retrieval and preparation of manufacturer and distributor data, to allow sales tracing and charge-back processing. It helps manufacturers figure out how much (in rebates) they owe the distributors who sell their products.

Unlike HPIS, in which large amounts of data are rolled up and “blinded,” med-ecom offers very specific information from specific distributors, again, to facilitate the rebate process, says Wigginton.

Expanded Offerings

The acquisitions reflect Neoforma’s desire to beef up its product offerings that are designed to help hospitals and suppliers improve their internal operational performance. In addition to HPIS and med-ecom, they include:

· Hospital master item file verification, cleansing, normalization and maintenance.

· E-commerce readiness services.

· Hosted materials management information systems with related services.

· Vendor-managed inventory capabilities.

The company continues to provide solutions designed to support process improvements between organizations, including its traditional e-commerce offering.

Both Ways

Because of its affiliation with Novation (through its Marketplace@Novation e-commerce offering), Neoforma has been identified most closely with hospitals. Indeed, in its early days, it focused almost entirely on signing up hospitals to use its service. But about two years ago, Neoforma executives modified that strategy.

“We could see that HPIS was providing a real service to suppliers and providers,” says Wigginton, adding that Neoforma’s interest in it “was more about product depth than customer depth.” With more than 800 hospital customers and 300 supplier customers, “the idea of acquiring companies that provide services to both started to make more and more sense.”

Given its mission, HPIS was more supplier-focused than any of Neoforma’s offerings. “That’s not to say we hadn’t been calling on suppliers,” he says. “We have more than 300 under contract. But it’s a different sales proposition.”

“The business has exceeded our expectations,” says Wigginton, speaking of HPIS and med-ecom. “We now believe the potential to be significantly greater than what we originally thought.” In fact, HPIS and med-ecom have allowed Neoforma to:

· Understand and address the technology infrastructure of the healthcare supply chain.

· Provide more reports and analysis to its customers.

· Deepen its relationships with the HIDA distributors who submit data to HPIS.

· Deepen its relationships with the manufacturers who already use Neoforma. “We have renewed and expanded agreements with many marquee names in the manufacturing world,” says Wigginton. “It’s easier to grow a business from that perspective than, ‘here’s what we’ll offer in the future.’”


Aliso Viejo, Calif.-based Revelocity offers products and services to hospitals and suppliers to streamline procurement processes, manage inventories, track project and patient costs, leverage bar-coding efficiencies in internal distribution and share replenishment demand information securely over the Internet. The product mix includes modules that offer Web-based par replenishment and electronic requisitioning solutions for hospitals, and consignment and vendor-managed-inventory products and services for healthcare manufacturers and distributors.