This is an excerpt from Medically Necessary, a health care supply chain newsletter. Subscribe here.
The news: A Seattle-based startup aiming to give health care providers an easier way to get medical supplies recently raised $1.5 million in seed funding to expand its business.
Founders JT Garwood and Jack Miller created Bttn in March 2021. The company is an e-commerce business that allows health care providers to buy medical supplies at wholesale prices without committing to a more restrictive relationship with a group purchasing organization.
“We’re purpose-built to be the antithesis of what you would imagine a large GPO or medical distributor is today,” Garwood told FreightWaves.
The plan: Garwood, who previously helped create another online marketplace for personal protective equipment, said Bttn is supposed to be more transparent and more flexible than GPOs.
The company’s website works a lot like familiar e-commerce websites. Prices are displayed openly and the company offers free shipping. The experience is designed to feel like buying from Amazon.
“If it’s as easy as ordering off Amazon Prime, then I don’t want to fax in my order sheets anymore. I don’t want to call my sales rep,” he said.
Bttn also aims to add more automation to the process of sourcing medical supplies. The website already has an automatic subscription feature, similar to the way customers can place recurring orders for shampoo or dog food on Amazon.
Garwood believes that the simple process will have special appeal for smaller health care providers that may not have an existing relationship with a GPO. He argues that Bttn would offer a simpler way to get wholesale prices.
“Our value prop really resonates with the person that doesn’t have a chief procurement officer,” he said.
The trade-offs: GPOs are able to secure low prices for medical products by combining the demand from lots of hospitals and health care providers. The large demand gives those companies more bargaining power.
Bttn is tiny compared to major distributors. The company says it has about 300 customers and has sold about $500,000 worth of products.
Garwood acknowledges that Bttn doesn’t have as much bargaining power as a GPO, and as a result it could end up with higher prices. But he argues that avoiding restrictive contracts with manufacturers also gives Bttn and its customers much more flexibility.
“If you’re coming with an order sheet of 20 million units a month, and I’m showing up with half of that, you’re going to get the better price,” he said. “But what we’ve seen is that the price differentiation is not crazy, and that is not being passed along to the consumer.”
The reviews: Darryl Sanford, director of member relations and association services for the Hospital Association of Southern California, said he’s excited about Bttn because it has the potential to save hospitals a lot of money.
“There’s no membership costs. There’s no sign-up fees. There’s no contracts. That’s a big difference,” Sanford told FreightWaves.
The hospital association recently listed Bttn as an “endorsed business partner.”
After a pandemic that pushed overall health care spending down, he says hospitals need those savings. But he also thinks the user-friendly interface and tools for automating orders will attract customers in the future.
“There are a lot of different companies and lots of new, fresh blood coming up with innovative ways to do business, and Bttn is at the top of that list,” Sanford said.
What’s next? With seed funding secured, Garwood said he expects to start building out the company’s technical capabilities and expanding relationships with suppliers.
He wants to create a portal with detailed analytics and business intelligence that will help customers make better purchasing decisions. In the future, that could mean selling a software product to provide those insights.
However, the main focus going forward will be making sure the e-commerce experience is as smooth as possible.