Global Healthcare Exchange

Case Analysis Index 1. 2. 3. 4. 5. 6. 7. 8. 9.

About the Company Vision Goals Company Objectives Strategic Aligning IT Strategy with Business Strategy Fit of Activities Value chain analysis Trade offs .......................................................................................................................................

1. About the Company Global Healthcare Exchange was established in early 2000 to provide a worldwide online, open and independent electronic trading exchange to facilitate the real time transfer of information, money, goods and/or services in the worldwide medical equipment, products and services industry. Its founders included established healthcare providers like Johnson & Johnson, GE Medical Systems, Baxter Healthcare, Abbott laboratories and Medtronic. 2. Vision To grow as the global leader in business to business supply chain management solutions and services for the healthcare industry, providing superior member satisfaction, delivered by energized employees who are driven to meet commitments 3. Goals To transform healthcare by dramatically improving the efficiency of healthcare delivery through information exchange and by maximizing efficiencies in the supply chain. To facilitate continuous improvement in the relationship between all stakeholders in the healthcare supply chain resulting in collaborative communication, reduced costs and better patient care 4. 1. 2. 3. 4. 5. Objectives

1. 2.

To eliminate the need of intermediaries in the supplier-provider relationship for efficient supply chain management and to enhance customer s options through the power & speed of internet. To have uniform health care industry data standard for supply chain transactions over the internet in order to reduce cost of transactions. To have greater control on the fees being charged to the suppliers on a global scale To develop a quality utility model for the benefit of the suppliers as well as the customers To provide higher customer value rather than market value

5. Strategic Positioning From being a Supplier exchange, GHX positioned itself to be become one of the leading internet based healthcare marketplaces.

6. At the same time.They followed predominately a Need-based positioning so that they could make an efficient and cost effective supply chain management system for Healthcare products and services along with providing greater customer value based on trust. leading the customers to the suppliers but never interfering with the internal system operations of its suppliers. pricing and order details. technology partners) taken in the network by mergers or alliances. for faster penetration in the target market. manage their own data. GTX is connecting 3. service providers. Allow individual customers to handle their own business. fairness and transparency achieved by integrating the global supplier and customer base. y Later on GHX developed functionality within the Centrimed solution to effectively connect to its global suppliers. services. there was a need for consolidation of such entities and integration of operations between the merged entities. y An application was developed to connect the internal purchasing and billing systems of the buyers to the supplier s internal order fulfilment and billing systems. GHX gained technical know-how from third party supply chain solution vendors. The networked system provides different customized solutions to increase the stakeholder s value and integrates and simplifies the process of business interactions between all the stakeholders. While other dot com players wanted to influence and dominate almost at every position in the value chain. It not only integrated different business models and cultures but also enhanced customer value through technology. . Value chain analysis The approach of GTX in providing the solutions to its stakeholders was very different from others. IBM and Ariba. y The unique approach that GHX adopted to offer a good customer value was by acting as a bridge. Apart from the 5 founder firms and many other healthcare industry players (OEMs. GTX was never interested in taking over their customer s systems. product vendors. This allowed efficient supply chain management between GHX and independent healthcare providers. efficient healthcare supply chain and logistics. like i2. y Initially. y Another application was developed to connect alliance partner marketplaces with the GHX system.900 healthcare providers to more than 350 manufacturer and distributor divisions. This led to high utilization of internet technology to redesign the entire supply chain. suppliers and distributors. Aligning IT Strategy with Business Strategy In order to eliminate the inefficiencies in the supply chain of individual healthcare entities. y Acquisition of CentriMed helped GHX to utilize CentriMed solution to enable the customers to browse an integrated supplier catalog and obtain product descriptions. on an integrated and interconnected value added centralized platform. but. 8. Fit of Activities y 7. GTX has large business value network which included the large clientele. they also followed Access-based positioning to reach the global marketplace through the power of internet technology. What they wanted to provide is a network to connect all parties but stopping at the door of their organizations . The main stake holders in the health care market place provided by GTX are the providers. GHX was able to maintain its fit of activities by building unique capabilities across its various offerings. distributors or manufacturers. A system integration consulting service was also initiated for their supplier s network.

it is a services company and also a logistic and healthcare supply chain provider.The value chain includes a web based health care market place with many value added and customized software solution which brings potential customers in direct contact with providers and suppliers. Trade Offs GTX is a diversified player. It was difficult to streamline the different cultures brought in and practiced by different partners into a shared culture. Mergers and acquisitions were definitely served strategic business objectives but came at a cost of complex overhead of assimilating different company cultures. It is always a challenge to develop a perfect business model in such a blended plethora. They needed to compromise on conflicting business interests to have a viable pricing model where all stake holders pay for mutual benefits and to take the health care industry forward. 9.GHX has leveraged e-commerce technology and customized software solution to create an EDI infrastructure which enables suppliers to connect directly with potential custtomers and receive 100% direct orders from customers electronically. better resource utilization and better financial performance by reducing operating cost. so defining a common business interest was complex enough to handle. transaction cost. The inherent nature of any online business model is that the users don t expect to be charged for the services provided online. The total value chain interconnects the manufacturers to suppliers and healthcare providers directly with each other by technically integrating their individual systems by some standardized solution of GHX with an objective to make the total supply chain efficient and perform better financially by reducing operating costs for all members of the healthcare value chain.It starts with handling content management strategy efficiently by GTX solutions and ends at automating the financial transaction overheads. The complexity rose when GTX needed to attract buyers and they did not charge them and Medibuy needed to attract suppliers and it could not afford to charge them. .It also has to decide whether to gain more critical mass in Europe or concentrate on dominating US markets as different investors have different priorities. order cost. The solution is platform independent and makes the supplier s supply chain most efficient. helps to utilize employees more effectively. Provider s value chain . Its ROI depended on the customer to customer depending upon the rate of penetration of different GTH solutions into their core systems. improve financial results and allows the stakeholders focus more on patient care. making inventory management simpler and giving the suppliers better visibility to their market ecosystem to take better business decisions. The ultimate value is in reduction of operation cost. Resource management was again a major trade off as all the founders needed to part with some of their best employees at least temporarily. Distributers/Supplier s value chain . it provides technology solutions. thereby reducing the processing cycle time. It reduce operating costs. The founders of GTX were also competing giants. It is minimizing the order processing cost and time. transactional discrepancy and improving internal control.

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