Online resources help facilities log on to greater value

by Julie Williamson

There’s no denying the impact the Internet has had on business practices across the board, and in terms of streamlining processes and improving communications, there are few business sectors that have had a greater need – and offer more opportunity – than healthcare.

While healthcare has historically been slower than other markets to adopt computer-based technology, aside from treatment uses of course, today many more organizations than ever are interested in leveraging the power of the Internet. And even though all facilities are not yet moving full-throttle along the Information Highway, it seems a growing number are willing to map out a plan to incorporate at least some Web-based solutions into their day-to-day routines. In fact, more than ever, it’s the healthcare customer that is driving the developments of today’s online tools, sources told Healthcare Purchasing News.

"Healthcare is becoming increasingly savvy when it comes to online applications. More hospitals are realizing that Web-based solutions can help them improve processes, reduce inefficiencies and maximize resources," said Wynn Bailey, vice president of A.T. Kearney, a Chicago-based management consulting firm. "The more they realize the value, the more they want out of their solutions."

And providers of online tools are rising to the occasion. Whether it’s with Web-based solutions geared toward e-supply management, transaction processing, e-health, or clinical and benchmarking data, companies are expanding their offerings to better meet the demands of their healthcare customers.

Enhanced integration

With hospital spending expected to climb more than 77 percent by 2012 and healthcare supply costs ranking second only to labor in terms of total operating budget, it’s little wonder facilities are turning to Web-based solutions to help control purchasing costs. Those mounting costs may also explain industry experts’ prediction that approximately 90 percent of the nation’s hospitals will have at least some form an e-procurement platform in place by 2005.

After a slew of dot-coms promised to streamline the healthcare purchasing process and supply chain then failed to deliver and ultimately failed to stay in business, many healthcare organizations came to realize that basic electronic data interchange and spotty online purchasing were insufficient for making substantial improvements to the supply chain and to their bottom lines.

"What emerged from the hype were some very solid, integrated solutions," noted Ken Perez, marketing vice president, Omnicell, Palo Alto, CA. "Over the last several years, we’ve seen the development of robust solutions that can automate workflow, save time and integrate with back-end systems."

Enhanced integration via the Internet not only makes it possible to more effectively link purchasing partners, it also eliminates the need for all parties involved to scrap their current operating systems.

"With Web-based [supply management] tools, facilities can embrace and extend the capabilities of their existing systems at minimal cost. The Web has enabled us to very quickly and efficiently connect all participants in the healthcare supply chain and do so in a way that addresses all of the systemic inefficiencies," explained Steve Wigginton, executive vice president of marketing, sales and service, Neoforma Inc., San Jose, CA.

Today, providers of Web-based supply chain management solutions are doing more to fix the problems that have historically plagued e-procurement, including pricing discrepancies and product coding errors – a major advance given estimates that as much as 25 percent of a hospital’s supply administration time is spent correcting data inaccuracies.

"Many hospitals have various systems in place, but they are chronically failing due to the incorrect data being stored in them," Wigginton said.

Neoforma’s latest tool, Contract Management Solution, was designed to reduce such discrepancies. It also works to drive contract utilization for hospitals and suppliers by bringing together order transaction information with contract and pricing data in a single platform.

Through its solution GHX Content Intelligence, Global Health Exchange, Westminster, CO, reviews purchase orders for incorrect product numbers, units of measure and supplier divisions by verifying them against the company’s AllSource catalog. Product data is validated and corrected, if necessary, and "cleansed" purchase orders are forwarded onto the supplier. The solution then records the correction, which can be used to fix similar errors in subsequent purchase orders. After being notified of data errors via email, using the system buyers can quickly make product data changes in their internal item masters to prevent future errors.

"Simply placing an order online isn’t the way to improving efficiencies. Being able to automate the entire process and ensure that the data being sent is accurate so buyers and sellers don’t have to pick up the phone and solve problems manually is key," noted GHX chief information officer Kevin Ruffe. "There’s a greater understanding that unless you can have a solid partnership and automation between supply partners, there will still be a lot of manual work involved."

Driving compliance

E-procurement tools today are also becoming more sophisticated in their ability to capture and store data and are enabling healthcare organizations to review their order history and monitor contract compliance.

For instance, Medline Industries Inc., Mundelein, IL, is in the process of a website overhaul aimed at adding features for budget reporting and order history reporting that can be viewed categorically. Using the site, customers can run reports for all dietary-related items, for example, to track purchases and monitor monthly spend, according to Medline’s corporate communications director John Marks.

Via a suite of transactional reports, GHX provides trading partners with accurate and timely views of their purchasing data. The service, called Report Source, allows large organizations, such as integrated delivery networks and multi-division manufacturers, to capture and consolidate data across their systems, even when their facilities maintain disparate ERP of MMIS systems. Regs, another online GHX tool, streamlines the creation and approval of requisitions. Materials managers can order from a customized catalog to minimize off-contract purchases and then monitor the process of the requisitions online.

Beyond that, the company is piloting GHXcellence, an initiative that "brings buyers and sellers together to work on specific steps to improve automation and reduce errors," including identifying and expanding the types of EDI transaction sets each is prepared to send and receive, and the type of information to be contained in purchase order acknowledgements, Ruffe noted.

Simplified solutions

As e-supply management providers increase their capabilities and applications, they have also worked to simplify their solutions. After all, sources agreed that the benefits of even the most robust applications won’t be realized if solutions aren’t user-friendly.

A 2002 study by A.T. Kearney that assessed the way businesses create value through e-procurement further underscored that point. John Blascovich, one of the study’s authors, indicated that complexity of software and inadequate integration was a key reason organizations were struggling to implement Web-based solutions. Past e-supply management failure could also be credited to a lack of analytic support around the tools and lack of support and leadership at the executive level, he said.

Irving, TX-based Novation, through
its online health careexchange Marketplace@Novation, has added user-friendly solutions designed to maximize contract opportunities, enable members to place order in real-time, and at the same time, free up purchasing staff resources.

Medline, which says it averages in excess of $50 million a month in EDI orders and services more than 5,000 hospitals, is currently working to improve its data cleansing capabilities by moving into the realm of "area data modules" that can group information together to enhance key word and cross references for all products, according to Bryan McGonigal, director of e-commerce corporate marketing.

Omnicell has taken workflow automation to the next level by integrating its e-procurement solution OmniBuyer with its automated dispensing systems.

"This has allowed for totally paperless ordering," said Perez, who likened the integration to cola machines that can assess inventory levels and automatically order the appropriate products. "Imagine that type of capability, but make it more complex and apply it across a [large health system] with five different buildings. The impact on efficiency and accuracy has been tremendous," he continued, adding that Rush-Presbyterian-St. Luke’s Medical Center, an 850-bed health system in Chicago, has decided to link all its dispensing units to the solution.

Many facilities have logged substantial savings since using more sophisticated online solutions. Larry Dooley, vice president of supplier relations for Novation, said many hospitals that use the exchange are saving in the range of $100,000 and $500,000. He says that one Novation hospital, Willis-Knighton Healthcare System in Shreveport, PA, has saved approximately $2.6 million through better contract pricing alone.

Phoebe Putney Memorial Hospital in Albany, NY, says it has freed up 75 hours a week in purchasing duties and saves more than $500,000 since it began using Neoforma’s solution 15 months ago.

"Before, I couldn’t tell our customers what they ordered or how much was spent. Now we have access to all that information and more," said John Russell, Phoebe Putney’s director of materials management. By implementing Neoforma’s materials management system, he expects to save $2.7 million over the next five years.

A wider Web

Internet-related opportunities for healthcare aren’t just limited to supply management. On the revenue transaction processing side, through national clearinghouses such as Dallas-based Global HealthNet, hospitals can use online tools to manage a broad range of tasks, such as interfacing and sending claims for processing, correcting claims rejections online, taking administrative advantage of a payer/provider claims repository and receiving payment acknowledgements.

With its CLAIMS/online service, GHN provides direct medical provider billing access to the largest EDI value-added networks in the U.S., as well as payer billing connections to some of the largest health insurers in the industry. According to GHN -president Azadeh Farahmand, the cost of filing a claim via CLAIMS/online drops to fifty cents from $25, while processing time drops to five seconds from 25 minutes. With GHN’s ELIGIBILITY/online, an automated eligibility certification tool, users can process medical procedure eligibility requests and receive responses in as few as five seconds, versus the typical 20-25 minutes required for the manual eligibility process.

Beyond the wide range of business transaction applications, some healthcare facilities are relying on Web-based solutions for clinical data management, best practice sharing and even online patient communication – a practice driven in great part by Web-savvy patients who are requesting more online services from their care providers. A 2002 Harris Poll revealed that of the 137 million American adults who surf the Internet, nearly 90 percent would like to be able to communicate with their physicians online. More than two-thirds of people would also like to refill prescriptions, receive test results and schedule appointments online. What’s more, approximately one-third of adults online would be willing to pay out-of-pocket for such a convenience.

To better meet both consumer and caregiver demands, Web-based companies are offering more integrated, interactive online health decision support tools. One solutions provider, HAYES Inc., Lansdale, PA, tracks new and emerging healthcare technologies believed to potentially have a substantial impact on healthcare costs, utilization and quality. Healthcare facilities can use HAYES’ Web-based solutions to help patients make more informed decisions about their care.

WorldDoc+HAYES OnHealth is a consumer-focused website provided by payers, providers and employers as a service to their members, customers or employees. At the site’s core is extensive research that has been evaluated and compiled to inform on specific aspects of healthcare, such as treatments, tests and technologies. Reports are then given a grade rating to help patients and physicians winnow down their options.

Health system networks are recognizing the value of Web-based health solutions and are including them as value-added services for members. VHA Inc., Irving, TX, for example, provides its more than 2,300 healthcare organizations with comprehensive, health information that can be locally branded for a specific facility. Beyond just offering consumer health information, hospitals can customize their branded sites by offering more interactive applications, such as online registration and scheduling, and even secure, confidential tools for direct caregiver-patient interaction.

At the provider level, VHA offers a clinical knowledge management solution that promotes data sharing among members and allows access to best practices, care guidelines and even presentations from physician experts and executive leaders. The solution features built-in filters to ensure that the right information gets to the right person at the right time, noted Peggy Kjelgaard, senior director of knowledge and product management, VHA, adding that quality control systems are also in place to promote sharing of accurate information.

"Hospitals are desperate to get supplemental information from the Web and to have access to sources that have already filtered much of data for them," she said. "Like any other [online platform], it only will has value if the information being presented is credible and easy to access." HPN