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According to the analyst group In-Stat, the healthcare industry is a leading adopter of commercial mobile applications.1 Both healthcare suppliers and providers are using mobile solutions for a variety of activities – from increasing sales force productivity to enhancing patient care.

But while suppliers and providers are leveraging mobile applications to meet their separate business needs, they are just beginning to realize that these solutions can also bridge the gap between the two parties.

This article will explore the challenges faced by providers specifically related to the purchase of consigned goods and how suppliers’ increased use of mobile solutions can yield benefits across the entire supply chain.

While providers are increasingly using mobile solutions for activities such as managing medical records, writing prescriptions and tracking inventory of consumable products, there is currently an e-commerce gap in the hospital order and inventory management process for consigned goods which can account for 15 percent of a hospital’s spend. Because of the complexity of consignment orders, they still fall outside standard e-commerce channels, leaving many providers to rely on manual systems that are time consuming, labor intensive and prone to error.

Providers experience significant challenges when managing consigned inventory across a broad range of suppliers. This is particularly true when it comes to orthopedic and cardiology products where hospitals must manage expensive, implantable devices that come in many different parts, pieces and sizes, some perishable with defined expiration dates.

To demonstrate the challenges, take for instance a circulating nurse in the OR. He or she handwrites the patient’s name, gender and other information in the implant log. Next they pull a sticker that contains product information, such as the lot number and serial number, off from the implantable knee, stick it onto the implant log and toss the log into a box with hundreds of others.

At some point, someone else has the task of manually entering the nurse’s handwritten information and the information from the product sticker into the hospital’s materials management information system (MMIS). Additional time and labor is required if the product sticker happened to peel off from the implant log before the information could be entered.

"It is currently a very manual and labor intensive process that burdens a hospital’s already strained resources," said Nancy LeMaster, vice president, Supply Chain Operations, BJC HealthCare.

Further complicating the process is the challenge of keeping the product information in hospital item masters synchronized with supplier catalogs. Hospitals typically have products from thousands of suppliers in their item masters, which puts them in a position of tracking thousands of product updates each business day. Those updates include changes to product numbers, descriptions, units of measure, and price. The volume of price change is even more staggering, running to millions of price changes a year, depending on the hospital’s approach to contracting.

How can providers address these issues? By taking a look at how suppliers are managing similar issues on their end.

Medical device suppliers are implementing comprehensive mobile applications with their field sales teams to replace manual, time-intensive processes that impact both themselves and providers, such as order entry, product pricing and inventory management. As a result, they spend less time on paperwork and more time addressing providers’ needs.

One company in particular, Smith & Nephew, has reaped tremendous benefits from using mobile solutions to automate its inventory management and order processes.

In 2003, the company deployed 700 Hewlett-Packard iPAQ PocketPCs with barcode scanners to its sales representatives. The handheld devices are equipped with an application that enables them to effectively and efficiently process provider orders and manage inventory in the field.

With the mobile solution, Smith & Nephew’s sales reps have immediate access to detailed product information, pricing, reimbursement schedules, clinical tests, and competitive comparisons. Having this information at their fingertips is invaluable during meetings with providers. They can respond immediately to provider questions rather than having to call customer service to obtain the answers.

Reps can also process orders in real-time when they are onsite with providers. Using the barcode scanner they simply scan the product that needs to be replenished, enter the order details and the information is uploaded to the corporate system and processed.

In addition, the solution enables Smith & Nephew’s sales reps to easily track and manage field inventory such as consignment, loaner, samples, and trunk inventory. This ensures that they can deliver products to providers when they need them.

"As a result of the mobile solution implementation, we’ve increased overall productivity, streamlined and automated our business processes and – most importantly – improved our provider relationships by responding to their needs in a thorough and timely manner," said Joe Jackson, group director, Clinical Therapies Operations, Smith & Nephew Inc.

With a few minor modifications, the same mobile applications used by suppliers like Smith & Nephew could enable providers to take charge of their consigned inventory and order management processes like never before. The solution would integrate with the hospital’s MMIS and enterprise resource planning (ERP) systems. It would also have the capability to communicate with the suppliers’ systems to provide a completely electronic and automated process from start to finish.

"Our vision is that we could scan an implant bar code and be able to generate a purchase order at the provider site, create the implant log and communicate with the manufacturer’s system to decrement the inventory and, if it is a bill and replace item, reorder the product," said LeMaster.

A provider would use a handheld device to scan barcodes on products that are stored within cabinets and carts. This information would then be electronically transmitted to the hospital’s MMIS and ERP systems for real-time inventory management.

In the OR, a circulating nurse would use the same device and application to track product usage. The application would feature an electronic implant log so that he or she could simply record the patient information (name, gender, etc.) and then use the device to scan the barcodes on the implanted products.

Instead of placing a handwritten log with product stickers into a box, the electronic information would be wirelessly transmitted directly to the hospital’s MMIS and ERP systems, eliminating the needs for manual data entry and reducing the risk for missing or incorrect information.

Equipped with this detailed, real-time product information, the hospital’s systems could be configured to automatically transmit purchase orders to suppliers thereby maintaining adequate inventory levels.

Since the product information in the hospital’s system would be taken directly from the suppliers’ barcodes, there would be no discrepancies in the item masters and therefore no issues with purchase order reconciliations when the suppliers invoiced the hospital. Further integration with GPO and distributor systems could resolve contract pricing issues.

The healthcare industry is at the forefront of technological innovation. In recent years both suppliers and providers made the leap from paper to electronic transactions and data and they are now advancing to the next level of efficiency, accuracy and flexibility with mobile solutions.

By using mobile applications to automate inventory and order processing, standardize information and communicate electronically, suppliers can better serve providers, providers can reallocate time and resources back to patient care and both parties can improve efficiency and reduce errors.

Reference
1. Government, Healthcare Take Lead in Mobile Data Use, In-Stat press release, March 7, 2007.