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Blues Buying Through Web Auctions

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NU Online News Service, Jan. 16, 3:06 p.m. – The Blue Cross and Blue Shield Association, Chicago, says it is using a Web-based “reverse auction” system to solicit bids for some major purchases.

The association, which represents 44 independent Blue Cross and Blue Shield plans, is holding the reverse auctions with technology from eBreviate Inc., Walnut Creek, Calif.

A reverse auction is similar to an ordinary auction, except that the winning bidder is the seller that offers the buyer the lowest price, rather than the buyer who offers the seller the highest price.

The Blues association recently completed its first reverse auction, for high-end disk storage. The winning bidder charged the Blues plans a price that was 20% lower than the average price the plans were previously paying, the association says.

A 10-member advisory panel decides what products and services should be put out to bid through the reverse-auction system, the association says.

The association screens vendors before letting them participate in the bidding process.

The auction itself takes an hour, and determining the final results takes about a week, the association says.