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player ready...A Chicago-based Internet exchange is taking off in popularity for medical product manufacturers who see a chance to help health-care providers streamline their purchasing and keep costs down.
There are now more than 40 companies that have signed on to participate in the Global Health Care Exchange, six months after the e-commerce venture was announced by its founders, Abbott Laboratories Chief Executive Miles White told business leaders at last week’s Executives Club of Chicago luncheon.
North Chicago-based Abbott led the formation of the privately held venture, which has four other equity founders: Deerfield-based Baxter International Inc., Medtronic Inc. of Minneapolis, General Electric Co.’s Milwaukee-based GE Medical Systems and Johnson & Johnson of New Brunswick, N.J. Since its formation, the exchange’s list of new member companies includes another six equity partners, 35 manufacturers and three distributors.
Although the exchange won’t be operational until later this year, White was optimistic the exchange will vastly improve the costly and time-consuming process health-care providers face when they order everything from “MRI machines, all the way down to rubber gloves and tongue depressors,” White said.
“In an average year, more than $100 billion of health-care products and services are purchased in the U.S. alone,” White told a packed audience of nearly 1,000 business leaders last Wednesday in the International Ballroom at the Hilton Chicago and Towers Hotel. “Every percentage point reduction in that total equals a billion dollars. That does add up.”
Indeed, health-care businesses could use some help ratcheting down costs.
Industry reports say the $83 billion spent each year by U.S. hospitals alone could be reduced by $11 billion through improved business practices.
Plan ahead: The state’s largest health maintenance organization is keeping a healthy bottom line while profits remain elusive for most of its rivals, a new study indicates.
Blue Cross and Blue Shield of Illinois’ HMO plans made about $25 million in the first six months of this year while the rest of the state’s HMOs lost a combined $21 million, according to a new report from Minneapolis health-care consultant Allan Baumgarten.
The Blues’ HMO Illinois, which has nearly 760,000 plan members, is able to negotiate profitable contracts with employers looking for a large network of doctors and hospitals for their workers.
Still, having more choices in an HMO doesn’t come without a price.
Because HMOs restrict patients to using doctors and hospitals in their networks, plans that try to offer employers more choices for their workers must typically charge higher premiums to pay for a larger menu of medical-care providers. And HMO Illinois is no different in that respect, Baumgarten says.
HMO Illinois’ premiums “tend to be higher,” Baumgarten said. “HMO Illinois has been consistently making a 4 or 5 percent profit and the others haven’t.”
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