Although Novation is leading the charge for universal product numbers throughout the healthcare supply chain, the Irving, Texas-based group purchasing organization doesn't use UPNs for many products sold under its private label.
Consequently, products carrying the name of one of the industry's leading GPOs are contributing to the problems of a notoriously inefficient healthcare purchasing system.
Using the Novaplus imprint, Novation offers more than 300 items in all product categories ranging from pharmaceuticals to capital equipment. Novaplus products are projected to account for $1.3 billion of Novation's $17 billion in sales to its 2,200 members this year, said Angie Boliver, a Novation spokeswoman. Novation is the joint supply company for VHA and University HealthSystem Consortium.
Presumably, some of the manufacturers providing Novaplus products to Novation are stamping them with UPNs but determining which ones are coded is not a high-priority item for Novation. Boliver said the supply company has never performed an audit to determine exactly which Novaplus manufacturers are doing so.
Despite the deficit of coding on its own supply shelves, Novation raised the issue of UPNs as recently as June when it released a study on the value of e-commerce to the healthcare industry, a subject in which it has invested considerable time and financial resources (July 2, p. 32). The study, conducted by the Dallas-based healthcare supply-chain practice of Andersen, emphasized the crucial role universal product numbering would play in shaving as much as 10%, or $6 billion, from supply-chain costs. The standard would make it easier to track products as they move from manufacturing plants to distributors' warehouses and then to hospital loading docks, streamlining cost accounting and eliminating pricing errors.
UPNs, whose electronic conversions into bar codes are widely recognized by consumers, are credited for keeping inventory and warehouse shelves in shipshape condition in the retail industry. But the hospital industry has struggled to standardize, blaming the failure at least in part on suppliers that cloak their products in a jumble of coding that ostensibly protects proprietary information such as pricing.
Novation officials say if any Novaplus items lack the standard, it's because the manufacturers are not putting the numbers on them. They said they have not pushed their vendors to do so because they have not heard any outcry from hospital members.
"Members don't have the systems, and the suppliers don't want to put them on until the members have the systems. And the members don't want the systems until the UPNs are on there," said John Burks, Novation's senior vice president of e-commerce and information technology.
But Novation's rationale conflicts with another recent study that found that more than 90% of the medical supplies on hospital shelves already have UPNs on them (June 4, p. 16).
"Manufacturers for the most part have done their job," said Mitch Copper, who is senior vice president of Kansas City, Mo.-based Cerner Corp. and who crunched the data collected by the Healthcare EDI Coalition. "I am surprised and disappointed that they are not further along and still working with these reasons that are not 100% correct."
On the pharmaceutical front, Novation has made better progress, as has all of the industry, thanks to Food and Drug Administration-mandated national drug code numbers that appear on all drugs down to single units of use. Beginning Sept. 1, Novation told all of its Novaplus vendors that bar coding converting the NDC numbers must appear on all packaging, said John Riddick, director of quality assurance and regulatory affairs for Novation. Riddick could not say how long it would take to complete the conversion.
Similarly, St. Louis-based AmeriNet said it lacks UPNs on its private label, AmeriNet Choice. The St. Louis-based GPO offers 250 items across 10 product categories under the label. Sales for fiscal 2001 were $8 million, said Mark Moyer, an AmeriNet spokesman.
"We're at the mercy of the company doing the manufacturing, and that is really the thing that dictates whether our products will carry it or not," said Robert "Bud" Bowen, president of AmeriNet. "We certainly encourage the use of UPN, and AmeriNet is a strong advocate for its adoption. We're frustrated by the inability of the industry to mount a concerted effort in this regard."
Joe Pleasant, chief information officer for Novation's biggest competitor, Premier, agreed that the UPN stalemate represents a "chicken and egg situation," but he said if suppliers are first urged to get on board, it would be a short, relatively inexpensive leap for hospitals to follow by purchasing bar-code technology. Premier does not offer its own product label.
"Hospitals would have to change and buy new systems, but there is enough reason to do it," said Pleasant, who also chairs the Coalition of Healthcare E-Standards, which includes Premier, Novation and their e-commerce partners. "It would be shame on them if they didn't do it."