Tenet, Chemdex Teaming to Sell Medical Supplies Online

Tenet Healthcare Corp, the second-largest U.S. hospital operator, and Chemdex Corp., an online seller of chemicals and lab equipment, said Monday that they are forming an Internet company to sell medical supplies to doctors and hospitals.

Santa Barbara-based Tenet will own 76% of the new company, which hasn’t been named or given a management team, with Chemdex owning the rest, said David Perry, Chemdex president and chief executive. It could make an initial public offering by the middle of 2000, he said.

Tenet’s BuyPower group-purchasing organization will be the backbone of the new company. It already manages about $3 billion in purchases for 510 hospitals, 531 health facilities and about 45,000 doctors. Chemdex, which first sold shares to the public in July, will use its Internet-commerce model for the new company.

“We’re taking a $3-billion group-purchasing organization and making it a $3-billion Internet business,” Perry said. “The hard stuff in every one of these companies is how do you get a critical mass of buyers and sellers. When you begin, you have neither.

“The deal with Tenet lets us prime the pump and drive a significant amount of volume through the buyer side and gives us credibility with suppliers,” he said.

The company will open by late February or early March, he said.

Shares of Mountain View, Calif.-based Chemdex surged $6.94 to close at $99.38 on Nasdaq, while shares of Tenet fell 63 cents to close at $23.56 on the New York Stock Exchange.

Chemdex said Promedix.com, which it is purchasing, will be an exclusive online supplier to Tenet for the hospital chain’s specialty medical products needs. Chemdex is also purchasing closely held SpecialtyMD.com for $115 million in stock to supply information about medical products to doctors and hospitals.