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For an answer to operational inefficiencies in the healthcare supply chain (and perhaps healthcare operations in general), it’s ironic that information technology causes so much confusion.

Critics, skeptics and naysayers allege that too many competing interests and too many standards options complicate the ability of organizations to communicate with one another electronically. And as data sync proponents wage battles of will against apathy, confusion and procrastination hospitals are left wondering whether history is repeating itself all over again.

Back in the day, electronic data interchange (EDI) was going to render faxed and telephone orders obsolete and revolutionize purchasing. But despite EDI’s premise and promise in the 1980s, its capabilities were limited by the fact that few companies offered it and those that did required hospitals to maintain separate computer terminals for each vendor.

Proprietary EDI gave way to open EDI in the early 1990s, which eliminated the need for individual computers per vendor but required investment in translation software packages and endless discussions about value-added network (VAN) traffic. By the late 1990s, the Internet and the World Wide Web presented themselves as the next generation of electronic business using different languages (e.g., HTTP, XML) to facilitate business transactions instead of numbered codes (even though some argue that a significant amount of business via the Internet is merely EDI online).

To some, the current debate about synchronizing data seems to be heading along a similar pathway, with much of the discussion clouded in an alphabet soup of acronyms that seem to be derivative of one another with duplicative functions that succeeds in feeding the "competing interests" and "too many standards" theories.

But proponents argue that these theories are more red herrings than facts. That’s because each of the acronyms being promoted today (e.g., PDU, UDI, GLN) has a distinct function with little to no overlap. Generally, it’s the way that they’re used – not how they were inherently designed – that causes confusion.

For example, the unique device identifier (UDI) used by hospitals, manufacturers and distributors reference disparate product numbers, according to Peggy Brody, associate executive director, Coalition for Healthcare eStandards (CHeS), Ann Arbor, MI. "Currently, the manufacturer may assign a product identifier to individual units of products, while a different product identifier is often placed on a pallet by the distributor," he noted. "Many hospitals create their own product identifier for tracking and patient issue." Furthermore, key industry segments also cannot agree on how to populate and maintain a national database populated with UDI data, she added.

"I think the industry needs to look at how it does business and take into account that healthcare is not an island onto itself," Brody said. "It is part of the global business community. For example,  how do manufacturers and suppliers that provide products to the healthcare industry in the U.S. and globally, both retail and healthcare, manage the costs of operating with a different set of purchasing standards unique only to U.S. healthcare and not in any other industries?"

Brody cited the fact that Australia mandated that all healthcare purchasing transactions will be done using the GDSN (Global Data Synchronization Network). "What does this do to a BD or J&J that is doing business there converting to GDSN standards and also doing business in the U.S. to no standards or standards that are not globally accepted?" she asked.

Because healthcare facilities conduct business with other industries, such as buying products from companies like Wal-Mart or Sysco that use the GLN for transactions, it makes sense for the hospital to use the GLN as well, she noted.

"There really are not competing standards once you take a look at what the standards are that exist in healthcare and what they are designed to do," she said. 

Since its inception in 2000, CHeS has advocated the adoption and use of open data standards in healthcare. Last year, CHeS picked up the global community torch, advocating that the healthcare industry move to the same electronic system used by the retail, automotive, electrical and food industries because hospitals don’t just buy drugs and medical/surgical supplies. That system includes a universally accepted single set of standards to populate a healthcare-specific product data utility (PDU). The single set of standards includes a standard for customer identification, a standard for product identification and a standard for product classification.

When a solution to a problem involves software it’s natural to point to software suppliers as somehow falling short of expectations. But they’re not to blame. At least not entirely.

"I don’t think software companies have much blame in this," said Brent Johnson, vice president, supply chain, Intermountain Health Care, Salt Lake City. "Data is data. Functionality is how they differentiate themselves. Every software [application] should be able to synchronize data in multiple formats. You have to be able to map to any of these systems. It can be worked out. In healthcare, where everyone has legacy systems, people have not spent a lot of money on upgrades."

Cynthia Shumway, systems and information manager, supply chain, at Intermountain, agreed that it’s not about functionality so much but fields to identify item descriptions. "I’ve heard more frustrations from vendors [that are trying to synchronize data] but providers are not working with them," she said. "Software companies have to support this process by having fields in place to accommodate standards. The ability to customize fields doesn’t help."

Materials management information systems (MMIS) and field capabilities can impede necessary changes, concurred Mike Cassaday, president, MedAssets Analytical Systems, Bridgeton, MO.

"Not all purchasing systems or versions of systems will support the kinds of changes that are necessary," Cassaday said. "A classic example is with item descriptions. Customers may want to know specific information about a given product but they’re limited in the fields that house this data. Some systems only allow for 30 to 60 to 80 characters. Others may allow additions of up to 255 characters. That may not be enough to hold all of the necessary attributes for a given product. Also, some systems may not enable those attributes to be searchable. As a result, providers compensate by abbreviating data in their own way. So a technological problem becomes a systemic problem.

"In addition, there are a number of systems that don’t support some of the standards out there, such as UNSPSC, for example. That lack of support tends to throw off any analytics a facility may want to do," he noted.

But enough technology is available to support the fundamentals of data synchronization, according to Karen Conway, director, industry communications, for the Westminster, CO-based e-commerce portal and trading exchange Global Healthcare Exchange (GHX).

"In many cases, the technology already exists today to achieve data synchronization and the resulting benefits," Conway indicated. "For example, leading ERP software vendors already enable the use of industry standards such as UPNs or the UNSPSC product classification taxonomy. The same is true for larger provider organizations, such as HCA, Intermountain Health Care and BJC HealthCare, that have upgraded the capabilities of their homegrown and legacy systems to utilize standards. The problem is not all hospitals and suppliers have the same technological capabilities, sometimes even across their own organizations.

"But even if every organization were to have access to the latest and greatest technology, an even bigger challenge for many is knowing how to best incorporate better data accuracy and industry supply chain standards in their day-to-day business operations," she continued. That’s why continuing education is so critical. "While most databases can store industry standards, organizations are still unclear why they are preferable to their own proprietary numbers or why they need to ensure that their systems are utilizing such standards," she added. "Cross referencing numbers helps suppliers and providers achieve greater data synchronization without having to incur the expense required to synchronize their various software applications."

Like Brody and CHeS, Conway and GHX, as well as the Department of Defense’s Defense Supply Center, Philadelphia, and the new Healthcare Industry Standards Coalition, all support a central, single repository for data synchronization. In fact, GHX has documented success stories from a number of the market-leading suppliers and providers that have used data synchronization to reduce and prevent purchase order, PO confirmation, invoice and contract pricing errors, as well as cleanse their own data repositories and manage catalogs more efficiently.

"Without such a repository, communicating new product information to customers is highly manual, costly and slow, with suppliers incurring costs for paper, printing and distribution," Conway said. "One supplier claims there is a 60-day delay in the time prices and/or product information changes and when its sales force has access to that new data via paper catalog updates. As you can imagine, that makes data synchronization very difficult."

Plus, GHX’s AllSource content repository enables suppliers to publish information on more than 150 product attributes, such as whether a product contains latex. Currently, more than 30 GHX provider customers are piloting access to that expanded information, and GHX plans to roll out access to its entire provider base this year.

Conway added that hospitals also benefit from this with faster order processing, easier sourcing, fewer rush orders and lower freight costs, and identifying new contracting opportunities.

Brody added that software companies like Lawson and Oracle (PeopleSoft) already support the GLN in their MMIS products.

"For the industry to successfully adopt standards and move towards data synchronization, we need more success stories, even if they are small," said Keith Lohkamp, product strategist, supply chain management, Lawson Software, St. Paul, MN. "For example, there are pilot projects to test the use of the GLN that have the potential to provide a guide on how use a GLN. In the area of product classification, several Lawson customers implemented UNSPSC to maximize the quality and benefits of the analysis reports produced through Lawson Business Intelligence.

"The solution is not going to be just an IT solution," he continued. "It will require a combination of services, data, tools, software and, most importantly, agreement on business processes."

The pharmaceutical industry’s National Drug Code would seem to be an easy model to emulate for medical devices and products, but it’s not that simple.

Medicare established the NDC System in 1972 to identify drugs commercially distributed as part of its outpatient reimbursement program. Since then, the NDC, under the auspices of the FDA, has expanded to serve as a registry and tracking mechanism for "all drugs manufactured, prepared, propagated, compounded or processed for commercial distribution," according to the FDA’s Web site.

Rather than resisting what they saw as an inevitable development, a lot of the larger drug companies supported the NDC’s creation and the smaller companies followed suit, recalled Mary Beth Lang, president, Diagnostix, and vice president, contract spend analysis, Amerinet Inc., St. Louis, who previously advocated for unit-of-use bar coding on drugs and worked on the original pharmacy robotics system now owned by McKesson Corp. "They saw the NDC as a marketing differentiator for bar coding products at the unit of use," she said.

So why is it such a hurdle on the medical device side?

"A lot of medical device companies are smaller and have limited resources," Lang noted. "They don’t want to have to retool their systems [without widespread competitor and customer adoption]."

MedAssets’ Mike Cassady concurred. "Keep in mind that there may be tens of thousands of drugs, but there are millions of medical devices, so it’s substantially more complex on the medical device side," he said. "Certainly, it’s a way to start. If we approach this using a standard 80/20 grid analysis, determining the benefits in relation to pain points in four quadrants [high gain/high pain, high gain/low pain, low gain/high pain, low gain/low pain] we can determine the pathway needed. I’ve seen a lot of reports and results from think tanks but I’ve never seen that kind of analysis done or anything beyond that.

"The challenge we face now is that we are all going in different directions [with our efforts]," he continued. "From the providers’ standpoint, their core business is not necessarily managing the supply chain. Their core business is taking care of patients but they have a vested interest in managing the supply chain. On the vendors’ side, they are dealing with opposing forces in comparing the benefits of change to the costs."

Because products ultimately enter the supply chain from manufacturers it makes sense to some that they should initiate the disruptive data synchronization process. And a number of major companies have started.

However, the notion of "commoditization," where customers can easily compare products by their attributes, has some vendors concerned they might lose their competitive edge or ability to differentiate.

But Cassaday thinks those fears are much ado about nothing when you look to other industries as examples.

"There’s absolutely zero reasons as to why those competitive differences couldn’t be embedded in the data and in the system," he said. "It makes no sense why competitive advantages couldn’t be included in [standardized data]. Certainly, if customers aren’t receiving this information correctly then they have to demand it."

Cassaday cites Pepsi-Cola as a primary example. "You go to the store and can see that Pepsi is available in single cans, 2-liter bottles, six packs, 12 packs, 24 packs. Also, you can see the shape of the can, the Pepsi logo and even read the ingredients on the can," he said. "When you’re purchasing products via EDI, electronic commerce or some other technical process you don’t physically see those attributes. However, that data still is available in their systems. They have accounted for these competitive issues and product differentiators. So why can’t you do this electronically in healthcare?

"Every user of a product has every right to recognize and promote that one product is not like another. That’s where we’ve missed the boat," he continued. "There are key elements that allow for analytics and critical comparisons in the form of what differentiates products and also conveys what those products are. It’s all about attribution management. But it has to start with the vendor."

Cassaday acknowledged that vendors have to change their processes as much as providers, including affixing bar codes to unit-of-use packages, retooling production machines and recruiting marketing staff to incorporate standards into product promotion and packaging.

One leading manufacturer that recognizes its contribution and role in the process is BD, which currently uses the GDSN process on products that consumers purchase through retail outlets. "The process works quite well for that industry," said Dennis Black, director, e-Business, BD, Franklin Lakes, NJ. "Through our participation in the [Department of Defense-led Global Data Synchronization Network] pilot, we have validated that we can already meet most of the product data needs that our customers desire (unit of measure, short product descriptions, GTIN, etc.). It was not difficult to supply the product data for this pilot. However, we did need to reformat and modify some of our product information."

BD was motivated to act by several of its own key customers who "explained the effects that product data errors can have on patient care, healthcare costs and supply chain inefficiencies," Black indicated.

"The healthcare industry needs to finalize product data standards," Black insisted. "Today, the industry does not share a consensus view of the product attributes that would be necessary for true product data synchronization. Through the efforts of the DoD-led GDSN Pilot, we are beginning to understand exactly what product information healthcare providers truly need and can utilize today. In this pilot, DoD, Baptist Hospital (Miami), Mayo Clinic, University Hospital (Augusta, GA) and Premier have defined their product data needs."

Last year, a GLN pilot commenced to demonstrate how it would work in the purchasing process, according to Brody. Two GPOs (Novation and Premier), three IDNs (Mayo, Fairview and Allina), one manufacturer (BD) and one distributor (Owens & Minor) are participating.

Despite the circuitous history that former supply chain IT standardization efforts recorded, preceding the data synchronization movement, some experts claim this new push has extended farther than previous efforts and express hope that change finally will emerge.

"I’m cautiously optimistic that as we look at systems like what Wal-Mart has, for example, and as we move to the GLN that we’ll see some difference," said Amerinet’s Lang. "It’s safe to assume that the current efforts have progressed farther than previous efforts. But we have to make this easy. If you know that this is going to solve 90 percent of my location issues, then it’s worth my time. But if you know that this is only going to solve 50 percent of my location issues, then we’re not there yet."

Lang admitted that this effort "probably represents our best shot" at moving forward because people aren’t going to spend another 10 years debating it until the issue dies or participants move on. "We recognize that somebody is going to solve this," Lang said. "The technology has now caught up to this. We have fields in systems that can compensate for these needs. We didn’t have that before. Leaders of business segments with decision-making power to influence others are supporting this. We’re not going to be happy until we move into the implementation phase. We need these pilots, which are watershed events, to help us."

All the players in the healthcare supply chain simply must reach a consensus on the fundamental question of standard selection, according to John Roberts, director of healthcare, GS1 US, formerly known as the Uniform Code Council Inc., Lawrenceville, NJ. Naturally, Roberts and his colleagues at GS1 US believe that their system represents "the only rational selection" because it’s already supported by thousands in healthcare. "The remainder of the supply chain uses a motley collection of different proprietary, niche or GS1 standards," Roberts noted.

"All members of the supply chain want standards but not until their (customer, manufacturer, distributor, GPO, take your pick) selects one nothing will happen,"
he added.

Healthcare product manufacturers that conduct business globally typically use the GS1 system as several nations have mandated its use on healthcare products, Robert noted. "Until [the United States’] healthcare [industry] adopts the GS1 System, progress will be slow in standardized product identification, location identification and e-business transactions," he said.

Although the Food and Drug Administration’s requirement to bar-code pharmaceutical and biological products, and the federal agency’s consideration of expanding that to medical/surgical products is a step in the right direction, it falls short without the selection of a global standard, Roberts said.

"Without a standardized product, product data and locations, healthcare will not be able to build the software infrastructure that is found in retail, all based on the adoption of the U.P.C. 35 years ago," he said. "The road to cooperative commerce starts with product identification progress through data sync and ends with a transparent supply chain. This is not an easy trip but one being traveled by many industries today."

The healthcare industry just needs to take a giant leap, according to Cassaday. "Where I would see a lot of benefit is if we as an industry choose to support GLN, ANSI unit-of-measure and UNSPSC in a way that is relatively simplistic," he said. "That would move us forward in a really big way. We can be progressive from there. There must be a collective understanding of the requirements and long-term implications of doing this. It goes without saying that there would be long-term benefits derived from supporting bar coding, GLN, UPN. In my mind, what I know about the convoluted nature of data being used today I would say that the benefits from standardization and data synchronization would far outweigh the costs to retool machines and processes. But the challenge is in how to quantify that. This hasn’t been done yet.

"What will drive the need for these changes to take place is the data transmission, technological process and understanding and acceptance that change is needed," Cassaday continued. "The acceptance of change won’t come short of a clear understanding of the costs and benefits, systemic importance and the lack of a threat to competition. Unfortunately, there is no study that explores the path of data from beginning to end. It seems difficult to accomplish but we are dealing with a finite universe."

Helpful Info> Making sense of the alphabet soup of acronyms