Arguably, nothing pushes a materials manager's buttons as much as the subject of universal product numbers.
UPNs, more commonly recognized as the ubiquitous tattoos called bar codes, are credited for keeping inventory and warehouse shelves in shipshape condition in the retail industry. But the same type of coding is exasperatingly elusive when it comes to hospital supplies. Purchasing managers blame suppliers for cloaking their products in a jumble of coding that prevents easy inventory control.
This was readily apparent when the subject came up as part of a discussion on electronic commerce and automation standards at the VHA Leadership Conference in April. One materials manager asked why the VHA and Premier hospital alliances haven't demanded that all vendors slap UPNs on every item they sell, right down to the single unit. "Don't just talk about it. Do it," he pleaded.
Still another audience member complained that materials managers are woefully missing from the various standardization committees that have been formed to get at the bottom of the long-standing problem. Decisions that will affect how materials managers do their jobs are being made in the isolation of executive suites, he charged.
Mitch Cooper, senior vice president of Kansas City, Mo.-based Cerner Corp., claims to have the pill that will cure this chronic and seemingly congenital supply problem. All you have to do, Cooper says, is to be demanding. But it's up to the hospitals, not the group purchasing organizations, to do the demanding, he adds.
Cooper says he made demands for 15-hospital Health Midwest, also in Kansas City. Intent on organizing its supply operations, in January 2000 Health Midwest hired Cooper and Associates, Cooper's Chesapeake, Va.-based healthcare supply-chain business, which was acquired by Cerner in April 2000. Until Cooper came on board, Health Midwest's central purchasing operation was holding the tail of multiple hospitals operating independently with their own processes and warehouses, he says. A lot of clinical workers were getting wrapped up in supplies paperwork, which didn't help workforce shortages, he adds.
Cooper has spent the past 16 months transforming the operation so that there is one way of purchasing throughout the facilities. The concept is based on a retail model of doing business. Similarly to how retailers take inventory at the cash register, ideally each hospital will have a method for an item to be scanned at the point of care and then replenished.
It's all for naught, however, unless each item has a UPN.
"If you look at it from our standpoint, it costs the manufacturer one time to apply these labels, but it costs me every time I touch that product because I have to figure out what that number is," Cooper says.
So as a key part of the revamping, Cooper advised all of Health Midwest's vendors responding to a request for proposals to put UPNs on all products sold to the system. Vendors were given a Jan. 1, 2001, deadline to comply.
Most did so, and the rest are nearing home plate, Cooper says.
"I think we're in the 90% to 95% range," says Kent McAllister, chief information officer for Health Midwest. "(Most of the inventory items) do have UPN numbers, but I don't know how many go down to the unit."
When Cooper first started tracking Health Midwest's purchasing operations, he found 35,000 unique items on its shelves. The system purchases $160 million worth of supplies annually. McAllister can't say how much money the new purchasing system has saved, but for the first time, he says, the system has the ability to take one look and determine how much of a particular item it purchased from a specific vendor and what it paid for it.
"We're early in the game. We're on the field, and the field is laid out ahead of us pretty clearly because of the management data we have," McAllister says. "That is really refreshing when we have been blind to most of the data in the past."
John Burks, senior vice president of e-commerce and information technology at Novation, has his doubts that it's all as easy as it sounds. UPN numbers frequently are found on cases of products, but it's been a struggle to get suppliers to redesign packaging to put bar coding on each unit of use, he says. So some hospitals are sticking a UPN number on items themselves, compounding the confusion.
"(Vendors) are not being compelled at any level within the supply chain to do just that," Burks says. "I think we as a GPO play a significant role in influencing (suppliers), and I think our customers have an obligation to encourage suppliers as well."
Cooper says when he tells hospital purchasers that they already have the power in their hands to standardize product coding throughout the healthcare industry, some gaze at him as if he were smoking something funny. But "you guys are the ones writing the check," Cooper insists.
"It's the provider's responsibility to go back and demand this. And where they demand it, they get it," Cooper says.