April 2007

First of two parts

by Rick Dana Barlow

When those seemingly endless discussions about the need for data synchronization drone on, try timing how long it takes before the conversation turns to chickens.

Invariably, someone will mention the famous "chicken and the egg" tale, which can infuriate creationists, evolutionists/humanists and atheists alike. That leads to finger-pointing and the "Catch-22" debate that effectively has stalled, if not stymied, universal acceptance, adoption and implementation of standardized electronic commerce and synchronized data capabilities for more than two decades.

The historic and ongoing debate goes something like this. Hospitals and other providers recognize the inherent clinical, financial and operational value of data synchronization because they’ve heard and read about it for many years. But they argue that manufacturers have to align their data systems, transmit the right data from the start and not charge for it, while the software companies have to tailor their systems to accommodate standardized data painlessly and enable all of the disparate systems within the provider organization to talk to one another.

Manufacturers contend that they’re willing to make the necessary changes and costly investments if providers demonstrate that they’ll actively participate in the process and use the system. Manufacturers still worry about data standards compromising their competitive edge because they will allow customers to compare products in an "apples to apples" format, unless the software companies offer programming fields so manufacturers can differentiate products, effectively protect and market brands and prevent what they call "commoditization."

Software vendors are capable of this because they’ve done it for the food, grocery, manufacturing and retail industries outside of healthcare and for the pharmaceutical industry.

Distributors and group purchasing organizations, meanwhile, are caught in the middle, but clearly contribute to the turbulent data process in the areas of distribution fees and contract pricing where errors frequently surface.

Who’s on first? And why aren’t we farther along?

Unless you’ve never attended a conference or trade show or left your office or read a magazine for the last few decades or browsed the Internet’s World Wide Web since its debut nearly 17 years ago, chances are good by now you are at least somewhat familiar with data synchronization and all of its benefits – how it impacts clinical effectiveness, financial success, operational efficiency and patient safety as components of the healthcare delivery system.

Yet in seminar after seminar and news report after news report, study after study, one question remains. With all we see in other industries, with all we suspect could happen in healthcare, with all we know, why aren’t we farther along?

Here we remain, wondering just what will it take for hospitals and other healthcare facilities, product manufacturers, distributors, GPOs and software companies to fully embrace and actively support the concept of universal data synchronization, adopting and implementing the right technology and disrupting their status quo processes? What kind of administrative, clinical, financial and operational discipline – or pain – must be inflicted on providers and suppliers alike to wake them up, change their behavior and inspire them to cooperate?

Some may point to federal government regulations, tied to either reimbursement or patient safety issues or both, while others see insurance and managed care companies driving change using similar strategies and tactics. They instead focus on the more familiar – industry goodwill and self-improvement initiatives – once the fundamentals are achieved to restore order from chaos.

"Overall, it’s a trust issue, trust of the data not people," said Cynthia Shumway, systems and information manager, supply chain, Intermountain Health Care, Salt Lake City. "Manufacturers should be the source of truth because it’s their data. It goes back to the [electronic transaction] standards we’ve been pursuing for years. Some manufacturers’ catalog numbers aren’t matching what’s on the boxes. The Web page may have one number, but the order number is different so it becomes a challenge to marry packaging data with shipping and invoicing." Basically, the sales and marketing and the operations teams need to work together, she added. "We need a trusted source for data – updated by the manufacturers consistently and timely to support operations on both sides."

"We should hold manufacturers accountable to provide data in a standard, consistent format, and they should hold us accountable to transact business that way," Shumway continued. "What’s needed is mutual accountability. We can make a lot of progress if we hold each other accountable. Several organizations – both providers and manufacturers, Intermountain included – have made great strides in syncing data and trying to move the industry forward. I have seen progress, although it is much slower than other industries."

Brent Johnson, Intermountain’s vice president, supply chain, marveled at how far behind developmentally healthcare is to other industries. "Because I come from outside healthcare [in the electrical, utility and supply chain consulting sectors] I know that other industries are driven to do this by the efficiencies it generates," he said. "But healthcare seems to be fragmented. In other industries, suppliers are charging the right prices up front and these are loaded into systems. So I’m not sure if this is an integrity issue or an incompetence issue.

"We need resources to develop the infrastructure to make this happen," he continued. "A clean database is secondary to clinical and safety issues. Dollars are more focused on patients – and rightly so. If we were more profit-oriented and efficiency-driven – not at the expense of patients – we would have invested in this already. But we take second fiddle to the nobler mission. So we have to care enough about this to do something about it."

The hospital’s position at the "tail end of the data stream" complicates the process for them, according to Mike Cassaday, president, MedAssets Analytical Systems, Bridgeton, MO. "They’re the last to see it, handle it, analyze it," he told Healthcare Purchasing News. "They’re typically on the back end of the data they receive. In that position they find themselves all too frequently having to develop coping mechanisms and infrastructures – creating a standardized item files, ascribing numbering schemas – that should be supported at the manufacturer level. These coping mechanisms and individual repositories of data contribute to the problems we have.

"Taking all of these mechanisms and trying to structure them in such a way to meet their business needs is difficult for hospitals," Cassaday continued. "To that end, we’re seeing an emerging trend among IDNs that they want to get out of that business. They’re tired of developing and maintaining item files that become obsolete the moment they implement them. Keeping item files updated is costly and difficult because you have to have the right technology and the necessary people in place to do it. I will say that providers would embrace change immediately and rapidly if they were presented with good data from the start."

All or nothing

If every player in the healthcare supply chain implements systems that support data synchronization cost and efficiency savings will be realized, noted Joseph Pleasant Jr., senior vice president and CIO, Premier Inc., San Diego, CA. But that’s a big if.

"The problem is this: If any component elects not to do it, the efficiencies for everyone else are reduced," he said. "It’s the chicken and the egg. Who goes first? Everybody’s pointing at everybody else to do it first. Providers are saying that ‘I can’t do this unless somebody puts in the right identifier codes in the right way, and I can’t do it unless everybody else in the supply chain gives me this information.’ Manufacturers are saying that ‘I’m not going to do this until the providers tell me they’re going to do it.’ How do you get everybody in the same room to say that on this date we’re going to move forward?"

Pleasant contends that healthcare organizations only need to look outside of the industry for examples of data synchronization-related cost savings and efficiencies. Providers may be motivated by safety issues surrounding certain medical devices and pharmaceuticals, he added, or to ensure electronic medical records are transferable.

"Of those three imperatives for hospitals – safety, the electronic medical record, and cost – the safety issue may get them to move on their own, but the other two will not be achieved until the rest of the industry adopts something and moves forward in a consistent way," he said. "There may very well have to be some kind of mandate that forces the industry to move. I’m not sure I see all parties coming together and voluntarily saying we’re going to do this on a particular date."

In fact, ensuring patient safety may be the banner-waving rallying cry under which the government inserts itself into this debate, indicated Mary Beth Lang, president, Diagnostix, and vice president, contract spend analysis, Amerinet Inc., St. Louis. "The [healthcare] industry needs to be ahead of the government in this because it’s on the radar screen and being discussed at subcommittee levels. [Federal involvement] is coming. We either need to do it ourselves or the government will do it for us."

The FDA Unique Device Identification (UDI) project is a current example of government focus on patient safety related to medical devices, according to Lang. "The 2004 final rule requiring bar-coding of NDC numbers on drugs and biological products was established to help reduce medication errors," she said. "Medical devices were excluded from the bar-code rule because devices lack a unique numbering scheme. There is a new initiative being led by the alliance called the Healthcare Supply Chain Standards Coalition that is actively addressing this issue."

Linking data synchronization to patient safety is such an attractive healthcare issue for a senator, Lang noted, because "it’s not as controversial as universal healthcare that requires a major face life or overhaul" to achieve success. "A lot of providers are tired of cleansing their data," she said. "It’s costly to do on a regular basis. Why do we have to keep cleansing it? Why not improve how we transact business from the start? Imagine the money you could be spending on new technology that you wouldn’t have to spend on data cleansing."

But federal agency participation may be the last straw, if not the most effective way to drive data synchronization, according to Pleasant, who cited the recent bar code labeling initiative and the pharmaceutical industry’s National Drug Code (NDC).

"There’s not a "body" that can force it in healthcare as there is in other industries that have successfully implemented product synchronization – a la Wal-Mart," he said. "It might be possible that the [American Hospital Association] or another industry organization that has a significant influence over providers can get them to adopt and require data synchronization. But I think it’s really got to be a group like the FDA that forces the issue of this being required in order to improve safety. Current quality initiatives may be the stimulus, too, or perhaps major buyers of healthcare may say we’re not going to buy healthcare from institutions that don’t have integration and synchronization that drives patient safety and reduces the cost of care."

The domino effect

While it may be easy to sit the data buck squarely on the manufacturer’s doorstep, but that doesn’t necessarily mean all the pieces will fall into place down the line. Pleasant contends that all four major players in the supply chain have must step forward and assume their individual roles in the process.

"GPOs require manufacturers to use and report certain standards as part of many of the contracts," he said. "GPOs can require manufacturers to use a GLN, a product ID, through contracts, but it will require the providers to demand the use in order for the distributors and manufacturers to adopt them."

Meanwhile, distributors must support the standards. "Most of them have their own interfaces and their individual processes for cross referencing product and locator identifiers," Pleasant said. "Distributors have the best cross reference information. Distributors will require the provider to say this is what I expect from you as my distributor, these are the standards I want you to use when you’re working with me."

Furthermore, GPOs demonstrate their support the importance of product synchronization and supply chain standards through the Coalition for Healthcare eStandards (CHeS). In fact, GPOs that are part of CHeS have adopted the global locator number (GLN), a common taxonomy (UNSPSC), and data synchronization with a product data utility (PDU) for healthcare, according to Pleasant. "It’s now a matter of educating our owners and all the entities we support about what we’re doing and why we’re doing it and then getting them to support us in those efforts," he added. "We’re now doing pilots in all these areas to show that there are cost savings and efficiencies. We must do pilot work to demonstrate this is not a pipe dream."

Moreover, Pleasant noted that they’re piloting the GLN with a cross section of the industry, including several Minnesota hospitals, 3M Health Care, BD and Owens & Minor. In addition, the Department of Defense (DoD) currently is running a pilot Product Data Utility that includes representative companies from all parts of the supply chain. (CLICK HERE to jump to DoD story link.)

High-tech sabotage?

Because supplies represent at least a third of an average hospital’s operating budget, following the cost of labor, CEOs and CFOs are turning to the supply chain for potential cost reductions and savings, as well as ways to lower the costs of healthcare to the consumer and increase patient safety. But bad data hampers those efforts, according to Peggy Brody, associate executive director, Coalition for Healthcare eStandards (CHeS), Ann Arbor, MI.

"The savings that will come from improvements in data and processes that make up the supply chain, starts with a single, trusted source for synchronized and standardized product information that hospitals and suppliers can access," Brody said. "Once accomplished, an accurate, up-to-date and seamless supply chain will not only reduce costs, but improve patient safety and will provide the accurate and clean data needed for electronic health record, RFID and the use of other health information technologies in the future.

"Without a product data utility (PDU) and true data synchronization effort in health care, any attempts to streamline supply chain costs by implementing new technologies such as RFID are sabotaged before they are even implemented due to inaccurate item data," she noted. "In turn these efforts merely accelerate the generation of errors in the health care supply chain. It all starts with a single, trusted source for synchronized data."

Brody insists that the "single, trusted source for synchronized data" is the PDU for healthcare that CHeS and its group of GPOs, manufacturers, distributors, software vendors, providers and the DoD are piloting. But she added the healthcare industry as a whole should choose "the single, trusted source and who sees that [it] is built or developed based on a single set of standards that works."

Throw out the old

So what will it take to push the healthcare industry in the right direction? At the very least, an about-face on existing practices, according to Dennis Black, director, e-Business, BD, Franklin Lakes, NJ.

"An important first step is gaining consensus from healthcare providers, GPOs and distributors to discontinue existing processes and collectively begin utilizing synchronized product data as it becomes available," said Black, whose company represents one of the earlier – and active – supporters of data synchronization through a variety of pilot projects via CHeS and GHX. "By discontinuing all of the ‘customized one-off’ data sharing efforts that take place today, manufacturers can reallocate resources and focus on providing one standard product data submission industry-wide. Manufacturers will gain efficiencies as this step occurs."

Based on its professional working relationships with more than 3,000 hospitals, more than 200 suppliers and all of the major GPOs and software vendors in the U.S., Global Healthcare Exchange (GHX), views the ongoing debate from a high vantage point.

For data synchronization to be achieved in healthcare a variety of factors need to take place, according to Karen Conway, director, industry communications, for the Westminster, CO-based e-commerce portal and trading exchange. "Synchronizing supply data improves the efficacy of healthcare delivery and reduces administrative costs across the supply chain – from the point of manufacture to the point of use and back," she said. "The various industry players need to understand the relationships between that data through the use of industry standards, and to employ the use of those standards in their business processes, internally and with their trading partners."

From GHX’s perspective, the healthcare industry also requires an enabler and a central, collective repository for product data, be it GHX’s AllSource content repository, CHeS’ PDU or something else.

"The various parties need to work together to enable data synchronization in a logical, progressive and practical manner," Conway said. "For example, it would be ideal if all products at each unit of measure were assigned a [Universal Product Number] and that all parties in the supply chain only used that number to identify that product, in transactions, on packaging, etc. The key, in this case, is accurate translation, or in technological terms, mapping. I liken it to enabling communication between individuals from various countries. Certainly it would be best if everyone spoke the same language, but until they do, we need translators who can accurately communicate what the various parties are saying.

"GHX and its participating suppliers and providers have had success in this area by utilizing technology that identifies and corrects inaccuracies in purchase order information, such as item numbers or vendor names, during the transactional process and notifies the parties of any changes they need to make to keep their data accurate," she added. "In this way, the transactions can continue to flow in an automated manner, while the various parties can make incremental improvements toward full data synchronization."

MedAssets’ Cassady proffers a four-point plan for successful data synchronization that is contingent on technological support. "1. Providers must receive clean and correct data from the start," he said. "2. Technology has to support the collection and transmission of this data from the suppliers to the providers. 3. Providers must be able to apply standards retroactively to existing and historical data. 4. These systems must be able to communicate and integrate with subsystems, such as the OR system, billing, chargemasters, etc. It’s a substantial wave effect."

Despite ongoing challenges, some experts remain optimistic about the progression of current efforts when compared to the results of previous efforts.

Keith Lohkamp, product strategist, supply chain management, Lawson Software Inc., St. Paul, MN, emphasizes that the healthcare industry has made "substantial progress towards data synchronization over the past few years," courtesy of CHeS, the new Healthcare Supply Chain Standards Coalition and industry support. "Our customers are now expressing optimism that we are getting much closer than ever before," he added.

"For the industry to successfully adopt standards and move towards data synchronization, we need more success stories, even if they are small," Lohkamp noted, referencing a number of ongoing pilot projects that focus on product classification and location tracking.

"If we don’t see full synchronization by [President Bush’s 2014 national health record deadline] we will see active pockets of synchronization, but I don’t think the industry will be satisfied with that," said Amerinet’s Lang. "It’s not the end goal, but we’ll have momentum. We already have a model with the DoD."

Premier’s Pleasant concurs. "I think we’re much closer than we’ve ever been," he said. "I think there are currently many imperatives around the need to adopt an EMR and to improve patient safety that will drive the adoption of standards and data synchronization in healthcare. "

Next month: HPN explores the challenges with manufacturers and software providers.

In sync: Getting the supply chain act together
Federal, industry players collaborate to improve healthcare delivery,
reduce costs