Earlier this morning MedAssets announced it was acquiring fellow healthcare GPO Broadlane. According to the announcement, MedAssets “has entered into a definitive purchase agreement to acquire The Broadlane Group … Broadlane Group is a leading provider of supply chain management, strategic sourcing of supplies and services, capital equipment lifecycle management, medical device or PPI cost management, centralized procurement, clinical and lean process consulting, and clinical workforce optimization.” The announcement suggests that together, “MedAssets and The Broadlane Group would have reported non-GAAP combined net revenue of $508.9 million and non-GAAP combined adjusted EBITDA of $161.8 million for the year ended December 31, 2009.”
MedAssets, like other GPOs, targets what it suggests in its own investor presentation is an $800 billion hospital market that is comprised of 5,700 acute care hospitals (nearly half of which are part of a healthcare system). This segment “represents the single largest component — nearly one-third — of the $2.5 trillion healthcare market” and is expected to “grow at a 6.5% CAGR through 2018 to $1.4 trillion.” Our cursory analysis of the combined entities suggests that MedAssets will continue to face significant competition from the two largest GPOs, Novation and Premier, as well as the healthcare advisory ecosystem, including Accenture, Deloitte, etc. Still, Broadlane does bring a somewhat differentiated legacy in the group purchasing field.
Indeed, to label Broadlane just a GPO is to diminish at least some of its software and solution assets, especially in the e-sourcing and contract management areas. For years, Broadlane invested material sums before e-sourcing and contract management software really caught hold among GPOs and integrated delivery networks (IDNs) in technology — built off of SAP’s Frictionless platform…

Mr. Busch displays a keen understanding of the challenges facing the healthcare supply chain. Excellent article.