© Reuters. Med supply stocks drop as Amazon preps an entry
- Amazon (NASDAQ:) spoke with hospital executives to tailor its Amazon Business service for medical supplies, according to the WSJ.
- Amazon sent employees to a “large Midwestern hospital system” for a pilot program testing if officials can use Business to order health-care supplies for the system’s 150 outpatient facilities.
- The program was customized for that system’s needs to allow for price comparisons between current distributors and Amazon Business.
- Hospitals typically negotiate and sign contracts to buy supplies directly from manufacturers or distributors. Group-purchasing companies can also negotiate on behalf of multiple hospitals to leverage demand.
- Fees, administration, marketing, and shipping costs account for up to 30% of health-care supply costs, according to Citigroup (NYSE:) Global Markets data.
- Healthcare distributors and group purchasers moving on the news: Cardinal Health (NYSE:) down 3.7% premarket, Walgreens Boots Alliance (NASDAQ:) down 1.8%, Owens & Minor (NYSE:) down 4.5%, McKesson (NYSE:) down 4%; Henry Schein (NASDAQ:) down 5.5%.
- Amazon shares are down 0.4%.
- Previously: Amazon, JPMorgan (NYSE:), and Berkshire Hathaway (NYSE:) launching a healthcare company (Jan. 30)
- Now read: Cardinal Health: Earnings Beat Shows Accelerating Momentum For This Dividend Aristocrat