Hospitals buy everything from gauze to imaging machines, mostly through paper orders, phone calls and group contracts. Neoforma set out to move all of it online. When it filed to go public in early 2000, health care was one of the biggest markets the internet had not yet touched. Business-to-business exchanges were promising to strip cost out of entire industries, and Neoforma wanted to be health care's exchange.

Partners Who Became Owners

Neoforma began in 1996 as a way for hospitals to find medical equipment. The bet grew larger: hospitals, suppliers and distributors would all meet on one electronic exchange. The company signed long agreements with VHA and University HealthSystem Consortium, two big hospital purchasing groups. Those deals brought hospitals onto the system. They also made the two groups major shareholders and tied Neoforma closely to two customers.

Absorbed by GHX

Neoforma priced at $13 a share in January 2000 and soared in its first months. The broad exchange idea faded with the market. The company settled into selling purchasing software and data services to its partner hospitals. In 2006 Global Healthcare Exchange, a rival backed by the industry, completed its purchase of Neoforma in a deal worth about $200 million. Neoforma's software lived on inside the larger exchange.

Cover: Field Hospital, Second Army Corps, Brandy Station, James Gardner. Art Institute of Chicago, public domain. Chosen for a field hospital (medical supply at scale).