Novation, Neoforma to offer `value calculators' - Brief Article

Health Industry Today, June, 2001

Suppliers and providers within a health care industry slow to embrace e-commerce transactions have demanded to know what their return on investment (ROI) might be if and when they adopt business-to-business (B2B) Internet practices.

Now, device and med-surg product manufacturers, distributors and buyers whose e-commerce rallying cry has been the industry equivalent of "Show me the money" may be introduced to a method of determining just where those dollars lie.

At last month's VHA Leadership conference in Los Angeles, executives from Neoforma.com and Novation said they have developed "value calculators" that will help every segment of the health care supply chain assess ROI.

The value calculators were developed as part of a study funded by Neoforma and Novation and conducted by an independent consulting firm.

The customized value calculators, to be reviewed by independent academic researchers from Harvard and Stanford Universities, are designed to enable all parties within the health care supply chain to assess the economic impact of e-commerce initiatives on their respective bottom lines.

Final results of the study--and the calculators--will be released later this month.

"For the first time, health care supply chain participants will have a tool they can use to assess the value of using e-commerce, with tailored, personalized results, in today's dollars," said Dan Eckert, president and COO of Neoforma.

Preliminary study findings presented at the conference show, for instance, that e-commerce can dramatically reduce the amount of work required to fix order-processing errors. Those errors are said to often result in the overpayment of suppliers by providers, based on different contract prices for the same products.

"Inconsistent pricing and contact data exist throughout the supply chain, and have been a source of errors for all supply chain participants for many years," said Mark McKenna, president of Novation.

Study models, that update and replace data from a 1996 industry study, were developed to assess e-commerce value for medical/surgical distributors, medical/surgical manufacturers that sell through distributors, medical/surgical manufacturers that sell direct, and pharmaceutical distributors and manufacturers.