Originally Published MX July/August 2003
INDUSTRY ASSOCIATIONS
Electronic Data Standards Are ComingA call to action is being answered by a coalition of interested supply-chain parties.
Joe Pleasant
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| Joe Pleasant is chief information officer of Premier Inc. (San Diego), a group purchasing organization, and chair of the Coalition for Healthcare eStandards. |
Retail organizations rely on standardized data to keep track of products flowing into and out of their stores. In a competitive business environment, their financial viability can depend on this technology. While consumers appreciate knowing that stores are likely to have what they want when they want it, medical patients have a natural interest in data standards that goes deeper, for such data management can be a matter of life or death. Standards for the electronic data shared by hospitals and the healthcare industry supply chain are surprisingly lacking, however. Inefficiencies still plague this environment.
The Need for Standards
In 1996, a study called the Efficient Healthcare Consumer Response concluded that $11 billion is wasted annually because of healthcare supply-chain inefficiencies such as inadequate quantities being shipped, supplies not reaching their destination, reorders and revised orders clogging the system, and so on.1
A first step toward correcting this situation was a 1998 call to action by the healthcare provider community.2 Suppliers, distributors, and technology groups were urged to help fix the broken supply chain through an industrywide initiative to standardize healthcare product identification and labeling. Specifically, Catholic hospital organizations, group purchasing organizations (GPOs), hospital chains, and even the U.S. Department of Defense wanted a universal product number (UPN) standard for bar coding all products at the unit level, along with the software capability to process UPN information and create connectivity across the supply chain.
It hasn't happened yet, partly because healthcare became enamored with the dot-com expansion; standards development took a back seat to the bottom line for a while. Now that the dust has settled and hospital purchasers increasingly are adopting e-commerce, provider groups have refocused on data standards.
Data standards would ensure that all players in the supply chain communicate electronically in a unified format, thereby reducing procurement and shipping errors. They would make it more certain that the right medicine gets to the right patient, and that the medical facility has the device a procedure calls for.
The Health Care eBusiness Collaborative has found the lack of data integrity in trading partners' product data files to be a key source of errors. Such errors cost everyone in the supply chain time and money, and also hamper the delivery of medical products and services.3 The potential benefits of data standards through efficiency improvements are substantial. Healthcare providers, product distributors, and manufacturers can realistically expect to see the following five areas of improvement:
- A 75% reduction in rework caused by invoice-pricing and product-delivery discrepancies.
- A 30% improvement in the number of correct purchase orders.
- A 70% reduction in hours devoted to paper administration and data keying.
- An 80% improvement in time required to introduce new items, price changes, and promotions, including communication and execution of changes (from as much as two weeks down to two days).
- A 99.8% scanning accuracy at the point of use in the healthcare facility.4
Taking Action
For the past two years, the Coalition for Healthcare eStandards (CHeS), a group of leading GPOs and e-commerce providers, has pursued an agenda aimed at speeding up the adoption of electronic standards among providers and suppliers. Because they bring an outsider's perspective, CHeS members have helped construct roadmaps indicating what is required to improve the supply chain. From the outset, CHeS surveyed its individual hospital members to find out what issues they considered critical to help them improve their work.
One of CHeS's most recent accomplishments was assisting the United Nations in developing a new universal taxonomy for healthcare to be incorporated into the U.N. Standard Products and Services Code (UNSPSC). CHeS also supports the world body's selection of the Uniform Code Council (UCC) as the organization that will manage the data. The next steps for the coalition include selecting an identifier for healthcare entities—a numbering system to aid suppliers in identifying healthcare organizations for greater purchasing and shipping efficiency—and identifying a provider that creates a product data utility to synchronize and maintain accurate product dictionaries for all healthcare industry entities.
Progress has been slower than in the retail industry because healthcare organizations launched many different initiatives around e-business technology. Retail companies saw advantages to standards, and leveraged their purchasing power to get manufacturers to standardize data. Healthcare should follow suit, with hospitals and GPOs working with suppliers to standardize data.
For years, no one paid attention to standards, even in the days when there were one-to-one electronic connections between hospitals and suppliers. The one-to-many benefit that exchanges provide, and the formation of CHeS, changed that. Today coalition board members are getting calls from everyone in the industry wanting to know when CHeS will have completed its entire agenda.
References
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