VGM whips up Web ordering system

Monday, December 31, 2001

WATERLOO, Iowa - By debuting an Internet product-ordering system for providers, referral sources and manufacturers, the VGM Group is heading into territory that until now has been a tough nut to crack.

VGM brought its new AccuOrder system online in early November for referral sources and planned to offer it this month to dealer members who want to file Web orders with participating VGM manufacturers.

"It's still a little ahead of its time," admitted VGM's Dave Kazynski. "People are still a little leery of using the Internet. But 15 years ago people were concerned about fax machines."

VGM is espouses the Web wisdom that doing business over the Internet saves time and money by cutting down paperwork and administrative burdens. Nevertheless, the provider network realizes that to get AccuOrder off the ground requires overcoming the industry's memory of other HME B2B plays that fizzled. Productbuzz, for example, uncorked a business plan similar to VGM's but liquidated a year ago (after burning through $7.5 million in funding), in large part because dealers didn't embrace the concept. Other B2B efforts either lapsed in obscurity or, unable to turn a profit, abandoned the industry.

"One reason we think AccuOrder will succeed is because it is not our primary source of income," Kazynski said. "This is an add-on feature for VGM. If we don't do this, our business will be the same, but we think by doing it will help us and the industry."
The system doesn't cost VGM provider members a penny, and promises to cut down the time they spend ordering product by letting them order from multiple manufacturers at one time, rather than making 15-20 phone calls or jumping from one Web site to another.

"The question for the dealer is, 'Is it worth my time? Can I make my life easier? Could I be doing something else with my time?' Kazynski said.

For manufacturers, there's no up front fee, as there was with Productbuzz. They need only provide their catalog in electronic format and pay a small transaction fee per order. The benefit: reduced paperwork by processing orders electronically, Kazynski said.

(At the moment, AccuOrder's catalog includes about 100,000 products from a handful of VGM's manufacturer and distributor partners, including Invacare and Medline.)

The AccuOrder system, which VGM is licensing, was developed with insurance companies in mind, and since May VGM's been beta testing it with a payer that's a HomeLink member (the payer declined to be interviewed or identified). AccuOrder allows referral sources to peruse its online catalog. When the source orders an item, HomeLink kicks into action. The network hands the order to a geographically appropriate participating VGM member who delivers it to the patient.

Despite the challenges in building a successful B2B site, there's reason to be optimistic, said Michael Willy, who helped develop AccuOrder.

"Every day Dell is selling $10 million in computers (through the Internet) and they had been before the dot-com thing," Willy said. "Cisco is selling $1 billion a month over the Internet. HIPAA is driving this a little bit. I think people will use this as tool to establish administrative savings and establish relationships." HME