American Hospital Supply

MERGERS AND MONOPOLIES were the strategic focus of this large hospital supply distributor throughout the early 1980s. A reluctant merger with Baxter Travenol fell apart a decade later while the combined company was fighting product liability lawsuits for leaking silicon breast implants.

In 1982, the last year before the federal government slowed growth in the healthcare industry by introducing fixed-rate Medicare reimbursements, American Hospital Supply (AHS) pursued a strategy of obtaining exclusive contracts with Voluntary Hospitals of America (VHA), the largest group of non-profit hospitals in the United States. A federal judge ruled that the contracts were an illegal conspiracy and awarded damages to smaller suppliers.

The subsequent slump in the healthcare industry did not prevent AHS from pursuing a more formal vertical merger. In April 1985, ...