THE GOVERNMENT is putting some limits on the e-commerce of home medical equipment-digital signatures for claim processing, for example, are not officially recognized-but Internet business models are still allowing companies to bring products into new markets, shift existing distribution channels and otherwise find more efficient and effective paths to end-users.

NEW MOVES THIS FREEDOM OF product movement is revolutionizing more traditional HME trade patterns and relationships. For example, says Ed Rollins, M.D., chairman and CEO of Johnson City, Tenn.-based Cimtek Commerce, home of MedicalBuyer.com, "E-commerce makes it easy for a managed care company to buy directly from manufacturers. It's also easy for consumers to buy directly from manufacturers."

This open playing field also gives buyers-trade or consumer-a new ability to call the shots on how and where product moves. "Instead of paying whatever the seller is willing to sell a product at, the buyer can say, 'I want to buy a hospital bed starting at this price. Is there anyone out there who will sell it to me?'" says Rollins.

And at the top of shoppers' lists these days are vertical exchanges-comprehensive "megasites" that create a digital marketplace for virtual one-stop shopping. By some counts, as of spring 2000, more than 40 such sites were attempting to win the health care business. Their names might be familiar. MedicalBuyer.com is one. Neoforma.com, Healtheon/WebMD.com, MediBuy.com and ProductBuzz.com are others. They typically feature information on products, current news, regulations, educational events and career opportunities. They're designed to make it easier for hospitals, doctors' offices and other buyers to connect with a variety of industry resources and suppliers.

NEW TEAMS THESE VERTICAL EXCHANGES are big business-and have spawned a number of larger-than-life alliances among leaders in pharmaceuticals, health insurance and medical supplies. Five of the largest U.S. drug and medical supplies wholesalers, including McKesson HBOC and Cardinal Health, announced in April that they were launching a $100 million joint venture called NewHealthExchange.com. Johnson & Johnson and others are planning a site that will sell everything from X-ray machines to bandages. Meanwhile, six top U.S. health insurers, Aetna and Cigna among them, are in talks to develop an Internet claims processing site.

"We are what we call a multivertical within health care," says Bob Flury, executive vice president of business development at Neoforma, Santa Clara, Calif. "We've identified 13 vertical markets within health care on a worldwide basis, and home health is one of the largest. Our plan is to grow our business not only vertically-in terms of growing revenue within a vertical segment-but also to grow it horizontally as we branch out."

Exchanges such as Neoforma attract buyers by listing a wide assortment of products not limited to a single manufacturer or even a select group. "Our research shows a lot of people want to look at alternatives," says Flury. "If the manufacturer owns the Web site, are they really going to put their competitors' products up there in a fair light? And what kind of pricing are they going to put up?"

Rollins agrees. "I have a hard time believing that established industry players, regardless of the industry, can create a neutral exchange."

Despite their popularity and the excitement generated by their initial public offerings, not all of these sites will survive. "You don't have to be a genius to figure out that if the industry only supports two magazines, it's probably not going to support 42 portals," says Steve Neese, vice president of e-commerce at Invacare Corp. in Elyria, Ohio.

Many, for example, will not generate enough content to drive users to their sites. "The ones that will survive will not necessarily integrate, but they will be open to each other," Flury predicts. "There are going to be organizations that want to order products off of one exchange-and then punch out and order them off of another exchange." -D.C.