A not-for-profit group seeking greater efficiency in supply management is spearheading a collaborative effort to clean up the widespread disparity in the way descriptions of supplies are expressed electronically among manufacturers, distributors and healthcare customers.
The effort builds upon progress in the past decade to forge technological standards for electronic data exchange and the use of universal product numbers that are readable as bar codes (June 4, 2001, p. 16).
But it also acknowledges that standards by themselves are not enough to automate the healthcare supply chain, said Garren Hagemeier, executive director of the Health Care EBusiness Collaborative, which is directing the initiative.
"There are two main roadblocks to progress," Hagemeier said. "One is a lack of standards, but the other is dirty data."
Without a framework for common definitions and attributes of products-from the type of product to the unit of use-healthcare customers can end up with the wrong product or a different amount than they wanted because of glitches in how distributors or manufacturers interpret electronic orders.
Technology can reduce labor costs and improve turnaround time, but 28% to 30% of the cost of managing healthcare supplies involves dealing with the difference between what an organization thought it was ordering and what it got, Hagemeier said.
The collaborative supply-chain effort demonstrates the complexity of instilling computer-based standards in healthcare and the successive levels of problems that have to be worked out by consensus on the way to an ultimate goal of smooth automation.
Similar efforts in varying stages are under way for insurance transactions and clinical information handoffs.
The American Hospital Association recently realized the importance of information technology in general and the role of standards in particular to the success of its own initiatives to improve the efficiency and safety of healthcare delivery (Jan. 28, p. 22).
AHA executives said they were gearing up to increase awareness of standards efforts and generate support for collaboration within the provider sector of the overall healthcare industry.
Hospital-based systems recently have grasped the potential for savings on supply costs by disciplining their purchasing practices with help from a class of information technology called enterprise resource planning (Feb. 18, p. 44). But Hagemeier said such computerization won't go the distance in streamlining the supply chain for providers without synchronizing data with distributors and manufacturers.
Those resource-planning systems "still tend to focus on all the work that happens within the four walls of the hospital," said Bill Weber, a vice president with First Consulting Group. "As lovely as they are, business still stops at the dock door."
The Little Rock, Ark.-based group headed by Hagemeier is aiming to lift that barrier. Its membership includes 250 provider groups and individual hospitals, along with all major group purchasing organizations, manufacturers, distributors and healthcare software developers.
Formed in 1991 as the Healthcare EDI Coalition, its focus only a few years ago was on gaining acceptance for standards such as universal product numbers for all healthcare products and compliance with bar-code labeling of each product unit.
But as those standards became accepted, the gains had the effect of exposing some nonstandard applications of the standards in business practices, Hagemeier said.
For example, a bar code is able to store and report a lot of information about the product class, manufacturer, distributor, unit count and other details important to identifying and managing inventory. But unless all trading partners load the same information in the same place on the code, they can read the data differently or miss crucial elements that define every detail of a product order, he said.
A collaborative process to compare product definitions and synchronize terminology has broken the standards logjam in other industries, Hagemeier said.
Last month, the Healthcare EDI Coalition changed its name and adjusted its mission to fill that void in healthcare. "You can't gain any leverage in a marketplace unless you have some collaborative, lockstep motion," he said.
The newly renamed Health Care EBusiness Collaborative just finished the first phase of its product data synchronization project through comparison of data descriptions among a small number of trading partners.
The initial effort brought together healthcare manufacturers 3M and Smith & Nephew Wound Management; distributors Allegiance Healthcare Corp. and Owens & Minor; and the Department of Defense Supply Center in Philadelphia, the group purchasing organization for military hospitals and mobile medical units.
That exchange of detail on product data turned up numerous disparities in how the participants represented the same products, including duplicated or missing details that can lead to confusion in the ordering process. The first phase sought to determine the scope of the problem and lay the groundwork for using a template for basic data elements common to all products.
The next phase will increase the number of manufacturers and distributors comparing inventory data and working to reach common product definitions, Hagemeier said.