Investors flocked to Internet "life science" business-to-business market maker Chemdex (CMDX) after it announced this morning that it had signed a joint-venture deal with hospital chain Tenet Healthcare (THC) to create an online hospital-supply-buying company. Tenet will supply the buying might and organization of its 1,041 healthcare facility supply-buying club, BuyPower, and Chemdex will supply the software and Internet savvy. Tenet will own 76% of the nameless new company; Chemdex will own the rest.

Chemdex was up $7.13, or 7.7%, to $99.56 in heavy trading, while Tenet investors were less enthusiastic. The health care provider was down 38 cents, or 1.6%, to $23.81.

According to Tenet spokesman Harry Anderson, the new company would receive a percentage of each Internet-enabled transaction made by BuyPower members. Anderson declined to specify the percentage but said that BuyPower customers spend more than $3 billion annually through the purchasing group, and form one of the three largest healthcare buying groups in the country. "It gives Chemdex in effect a built-in customer base though our purchasing organization and gives us access to their technology," Anderson said.

For several years, Tenet had been mulling over other options, including developing its own e-commerce offering and spinning off BuyPower, Anderson said, but Chemdex's product allowed the healthcare conglomerate to "accelerate and enhance" what it was working on. Tenet expects to take the new company public at some point.

Though the new entity will have its own management and board, it will sport familiar faces. Chemdex President and CEO David Perry will be the nonexecutive chairman of the new company and Tenet COO Trevor Fetter and Chairman and CEO Jeffrey Barbakow will serve as directors.

Christian Mayaud, a venture capitalist with The Verticom Group and a founder of Physicians' Online says that the deal is "great news" for Chemdex, but the advantages Chemdex gains from the venture are dependent on the percentage cut the new venture gets on each transaction. Had Chemdex merely sold a license for use of its market-making software, the upside would be minimal ("So you're like a systems integrator. Big deal," says Mayaud).

But ownership in a company that will take early Web advantage of the huge healthcare supplies market from the inside is something entirely different, according to Mayaud, especially in the "Byzantine" and insiderish world of hospital supplies. "That's the only strategic move to make, and they made it," Mayaud said of Chemdex's move. "If they're getting a transaction fee it could be very powerful."

Forrester Research analyst Steven Kafka is also positive on the deal, though perhaps a bit less so, and also points to the Byzantine nature of healthcare as a reason that Chemdex used a Trojan Horse strategy of doing a deal with an inside player instead of attacking the industry from the outside.

"There is a need for these sites to plug into larger networks and lock up larger buyer and supplier networks," Kafka said. "It's a step in the right direction, [though] I wouldn't say it's necessarily going to lock other players out of the market."

Also today, Chemdex said it would acquire SpecialtyMD.com, a doctor's information hub site, in an all-stock puchase valued at about $115 million. SpecialtyMD.com's investors would receive 1.25 million Chemdex shares in the deal, which Chemdex said it expected to close in the first quarter of 2000.