INSIDE THE CURRENT ISSUE
Turning the crimson tide of process inefficiency
will healthcare universally implement supply data standards?
by Rick Dana Barlow
Ten years ago this
May, a group of 13 pharmaceutical and medical device companies convened a
kick-off meeting in Princeton, NJ, that concentrated on a critical but
daunting array of goals. They wanted to prevent medical errors, authenticate
products, track and trace those products throughout the supply chain and
increase total supply chain efficiency.
That "first mover" group effectively laid the
foundation and groundwork for the Healthcare User Group under the auspices
of GS1 and its set of global standards for products in a variety of
Outside of healthcare, most industries and their
myriad participants have recognized and used the GS1 standards to improve
their own financial and operational status.
Save for those manufacturers and distributors who
move products to the consumer retail markets, inside of healthcare, many of
its myriad participants can’t seem to get past the idea of adopting and
Since the 1970s when bar coding emerged on
healthcare product labels going to providers, the debate over standards as
well as the variety of schema and systems that debuted, ebbed and withered
away, never exceeded the boiling point toward actual mass adoption and
The opportunities abounded: From the Common
Category Database initiative in the late 1980s to the open electronic data
interchange (EDI), translation software-driven value-added networks of the
1990s to the Universal Product Number initiative in the early 2000s to
comprehensive cross-referencing data library initiatives by GHX and McKesson
Corp. and the Unique Device Identification (UDI) initiative finally blessed
by the Food and Drug Administration last year.
Fast forward to 2015. The needle on the
"standard-o-meter" has bounced and wavered throughout the last 10 years,
peaking around certain "flash points." Those include "sunrise" dates for
adoption compliance or around conference presentations, seminars, Webinars
and trade publication publicity that extol the virtues of adoption and
implementation as well as the challenges and problems of maintaining the
But the needle has yet to solidly settle in past
the halfway mark of providers and suppliers actively using them.
Despite the hemming and hawing of resistance
through the years, the unanswered questions remain the same: What’s the hold
up? Why is this taking so long?
Historically, complaints centered on which
standard to use? Who pays for adoption and implementation? How will this
disrupt the supply chain and inconvenience people in the short-term,
regardless of long-term benefits?
Manufacturers expressed fears of their products
being "commoditized" and profit margins squeezed as providers salivated over
the prospects of busting through perceived excessive marketing hype and
sales tactics to make informed purchasing decisions more quickly.
Group purchasing organizations (GPOs) may fear how
supply data standards affect their own records. If you’re able to track
product movement you’ll have a more accurate picture of your membership’s
annual purchasing volume (APV), which may affect some of the numbers being
promoted throughout the industry.
Several of the leading GPOs have complained to
Healthcare Purchasing News about their competitors "double
counting" purchasing data, specifically orders from manufacturers that are
delivered through distributors. The accusers claim that certain GPOs count
what should be a single transaction per product twice — one transaction from
the manufacturer and the other from the distributor with its markup fee for
services rendered. That’s two distinct and separate transactions for a
single product, a double-dipping of data daring do.
Of course, provider supply chain professionals may
fear that universal supply data standards may reveal something more
fundamental and damaging: They’ve been working with "questionable" numbers
over the years, making them largely ineffectual at their jobs. It’s like the
old EDI refrain from the 1990s of transmitting dirty data faster between
And if the payers who control reimbursement get
wind of this then can mass hysteria be far behind?
After 40 years of supply data standards
opportunities and pep rallies, including 10 years of GS1 efforts,
Healthcare Purchasing News sought to poke a stick at the elephant in
the room. What will prod the market toward universal adoption and
implementation? Is resistance futile? Why?
HPN: By and large, suppliers and providers have
been shown the benefits of supply data standards adoption and
implementation, so at this point what is the healthcare industry afraid of?
What might or will standards reveal about finances and operations that seems
to impede acceptance?
Jay Crowley, Vice President and Practice Lead —
UDI, USDM Life Sciences
You know that I am one of the biggest supporters
of all of this, but, more generally, I think the wrong question is being
asked: "Despite the hemming and hawing of resistance through the years, the
unanswered questions remain the same: What’s the hold up? Why is this taking
Unfortunately, I think the question is still why —
why do it? What are the specific use cases that will drive adoption
[Consequently] I don’t necessarily agree with this
supposition. There are, unfortunately, very few well-documented benefits;
[only] a few one-off pilots.
Josh Skiba, Manager, Product Management, Business
When we talk about product standardization the
biggest fears from manufacturers are likely around master data management
and change management. The amount of effort and the investment of dollars,
time and resources that are required to prepare and submit data to the FDA’s
Global UDI Database (GUDID), and the risk for error in doing so, are
tremendous. A prevalent concern among manufacturers is ensuring the product
information they disseminate into the marketplace is accurate because once
it is out there it is very difficult to change it.
As for distributors, I’ve seen many who are
willing to be at the table and reach out to manufacturers to ensure they are
speaking the same language when it comes to products. I think there is some
concern among distributors that they will be inundated with change. So if a
manufacturer changes its product data, the distributor will have to change
that data in its systems in order to remain aligned. To manage this change
effectively, distributors will need to invest in change management as well.
The largest challenge to overcome is ensuring all stakeholders, including
software systems, solution providers, trading partners and contracting
entities, are engaged and managing the business process changes required.
In regards to software companies, GHX included, we
can be supporters and enablers of information management and dissemination.
Manufacturers should be able to focus their efforts on product quality and
providers on patient care and safety. Data and software really shouldn’t be
their number one priorities. But software companies are concerned that if
they build and offer solutions and services for data standardization in
healthcare, will their customers purchase and use them?
The greatest concern I’ve heard from the provider
community is how to both access and consume UDI data, and what to do with it
once they have it. There is a huge push to capture UDI data down to the
point of use so that it can be used in electronic health records (EHRs). But
there are many different steps that must be taken before that happens,
particularly around modifying processes and systems. Fortunately there are
many in the healthcare industry willing to help, whether it’s a technology
partner like GHX or an enterprise resource planning (ERP) vendor, a business
partner such as a manufacturer or distributor, or other healthcare
organizations that are tackling the same issues.
Any organization looking to adopt location or
product standards must identify the complexity of system integrations and
how the data propagates throughout the ecosystem. When an organization looks
at the outcomes of the analysis, it can be very daunting. In our experience,
companies that make the best progress in adoption accept this complexity and
understand either how to align resources internally or whom to ask for help.
David Reed, Vice President, Healthcare Business
Solutions and Operations, Corporate Compliance Officer,
There is a tremendous amount of work that goes
into implementing data standards, on the provider and supplier side. It
requires a significant amount of time, investment, and energy for
organizations that are already facing daunting pressure from the industry. I
believe there is anticipation and excitement around data transparency and
recognition of the value that data standards will bring to the industry
long-term. The trepidation comes in when organizations have to face the body
of work that’s ahead of them in order to make it happen. It’s important that
the work necessary to implement the standards is prioritized by suppliers
and providers in parallel to insure that adoption occurs.
Phillip Pettigrew, Director, Materials Management,
Denver Health and Hospital Authority
I don’t believe it is a matter of fear. Standards
adoption has not become a priority of the various constituents because the
perceived benefits don’t out-weigh the cost. It is as if no one wants to be
an early adopter. Therefore suppliers, providers, and GPOs take a wait and
see attitude until a critical mass converts and the momentum builds until
change is pervasive throughout the industry.
Todd Tabel, Vice President, Supply Chain, Workflow
Solutions, McKesson Corp. Enterprise Information Solutions
From a computer’s perspective, having standardized
codes makes all the difference in the world — by definition, one would know
what the product is and the correct associated unit of measure
packaging. However, from a human perspective, we are descriptive beings and
look for things visually (descriptively); and thus the problem of
descriptive variation remains.
McKesson believes that the supply chain is a whole
lot more than placing orders and negotiating for best price. It is not
simply a matter of the correct product codes — hospitals need to know the
relationship of those codes/products to one another and to the products’
clinical and financial outcomes.
To remain relevant the supply chain will have to
migrate towards the clinical domain and provide assistance with the thorny
problem of improving product utilization, (i.e., consumption), both within
individual hospitals and across IDNs. This will require more meaningful
product descriptions that can be used to find relevant products; compare
based on a combination of price, clinical outcome, and impact on revenue;
and control the downstream path so that the desired cost and clinical
outcome can be realized.
Philip Oaten, President,
In order for coding standards to be effective in
the clinical domain, several things would need to happen. Skilled clinical
resources would need to hard-code the relationship between product codes.
Standardized care paths would be required, which do not currently exist. We
have seen first-hand that physicians are trained person-to-person (like
apprenticeships of old) and not to a collective standard. As a result,
clinicians tend not to agree with each other with regard to specific product
Therefore, situational code mapping would be
required by each hospital, based on specific clinical need — potentially
down to the department level. This process would be further complicated
because there is no descriptive element to GTIN codes, limiting clinicians
to descriptions similar to those that exist today.
Michael DeLuca, Executive Vice President,
Technology and Client Services,
I believe manufacturers are the fulcrum of
standards adoption success. Manufacturers feed provider demand by making
their data available. Manufacturers are afraid that transparency will lead
to commoditization. Today, less than 0.001 percent of manufacturer content
that is provided to the GDSN today is provided under a public domain.
There are exceptions, of course. Cook Medical is a
great example of a manufacturer that has adopted data standards for the
collective good of healthcare. In the process, they realized their own
benefits of improving supply chain efficiency. We need other manufacturers
to follow their lead.
HPN: What more is needed to convince providers and
suppliers to take the plunge?
Salil Joshi, Senior
Director, Industry Development — Healthcare, GS1
It is not that suppliers and providers need to be
convinced to adopt standards. The industry has generally accepted the
benefits of data standards and the positive clinical and supply chain
outcomes that will be derived out of implementation of standards. As any
industry moves through adoption, various entities react differently towards
adoption. We are at that stage in the healthcare industry supply chain where
manufacturers have taken the lead as a result of various regulatory and
Suppliers need to continue leading the effort as
they are the source of data that is consumed by the industry. Even after the
passage of the UDI compliance dates, suppliers will need to be involved and
measure the progress.
Providers had been waiting for all these years for
the industry to come together on data standards. Finally, as a result of
several regulations, the industry has moved closer to making standards a
reality. As providers are the ultimate point of consumption of the data,
they will need to start planning their activities. Providers will need to
make robust project plans and dedicate enough resources to supply chain data
activities to make it a reality.
Jean Sargent, CMRP, FAHRMM, CRCST, Director,
MedAssets, Centennial, CO
I believe suppliers are driving toward
implementation as required by the FDA UDI. Providers need to understand that
the implementation is not as daunting as it may appear, understand the
strategy to propose the executive leadership to enable as a strategy for the
organization, and reach out to others who have experience with
implementation to understand lessons learned.
Nancy LeMaster, Vice President, Supply Chain
Operations, BJC HealthCare
I think it always helps to showcase early adopters
and their successes. Cook [Medical] is an industry leader. How-to guides and
efforts to simplify the process as much as possible are needed. Overall, I
don’t think it is a different message as much as it is persistence and
continuing to keep this in front of people. The ongoing financial pressure
is also going to be a factor. Providers have to get their supply costs down
to survive. Using standards is a way for both parties to eliminate waste and
take cost out of the supply chain. As one of my physicians told a supplier
recently — doctors are getting paid less, hospitals are getting paid less
and you are going to get paid less. It is just a market reality.
benefits and persuasive business cases.
Reed: A lot of
organizations want to reach that end goal of collecting and using this data
to improve healthcare, but it’s a leap of faith to actually start the
process. Some are starting to be encouraged by others that have taken that
leap and are seeing results. The challenge is that this isn’t something you
can decide to do in January and see results in February. Our experience at
Cook was that once we decided to move forward with adopting data standards,
a decade ago, it took us five years to complete that project in North
America. Hopefully, as early adopters learn some best practices, that
timeline can be shortened significantly for some of the groups that are
starting their journey now.
Skiba: The sunrise dates
for GS1 Global Location Numbers (GLNs) and GS1 Global Trade Item Numbers (GTINs)
put the topic of healthcare data standardization front of mind. The FDA’s
UDI regulation demonstrated the value it could have to patient safety. It
also spurred more stakeholders into action but as a whole the industry has
been slow to adopt.
One of the main reasons I’m hearing in the
marketplace for a reluctance to adopt data standards is the enormity of the
task at hand. We’ve been saying for years that it’s harder than you think,
you need to start early and you need to start now. Now that stakeholders are
taking steps to implement standards they are getting a dose of this reality.
For example, for one major manufacturer it took over $2.5 million and 18
months to enumerate its products with GTINs and submit them to the FDA — and
that did not include data validation and addressing subsequent data issues.
Data standardization in healthcare is challenging
but not impossible. There are resources available and experts in the
industry who have experience in this area and can support providers and
suppliers in their efforts. Companies such as GHX that have visibility into
the broader healthcare marketplace and experience with global data standards
adoption can do a lot of the heavy lifting.
Pettigrew: There needs
to be published case studies of either significant cost savings due to
operational efficiency or patient safety that trumpet the virtues and
necessity of standards. The voice of the supply chain executive is seemingly
lost in the choir of competing clinical, IT and managed care resources.
Deluca: Suppliers need
to feel increased pressure from a large consortium of providers, telling
suppliers they must offer data transparency in order to do business with
those providers. Providers have myriad priorities — data standards being
just one. They need support from facilitators, like supply chain solutions
companies, that can take some of the burden off and help them make data
standards adoption a reality.
HPN: Should federal requirements and/or payer
reimbursement penalties be the final solution? Why?
Crowley: [This is]
likely the only path forward. [It’s a] chicken-and-egg argument — the only
way to show benefit is for there to be actual use.
Skiba: In my opinion,
federal requirements are a means to an end. They are that catalyst that’s
going to drive the healthcare marketplace to better standardization. For
example, we anticipate additional guidance coming from the FDA, which will
outline the provider side implementation of UDI. This will drive additional
focus and market adoption.
Unfortunately, this may be the only way standards adoption will find its way
to the executive suite and will receive the proper attention and political
clout to mobilize all parties in the supply chain. Regulatory pressure
resulting reimbursement withholding would be the impetus to escalate this
initiative on the list of organizational priorities. Otherwise,
organizations will continue down the path of least residence.
LeMaster: As much as I
hate the idea of government involvement I do wonder if we will be able to
make this a high enough priority without it. I’d like to see incentives via
meaningful use on the provider side. My concern is that if the government
does get involved organizations will focus on compliance not the true
benefits of standards.
Reed: The UDI regulation
in the U.S. has been a positive move in this area, but the industry still
needs to get our arms around this and ensure that we’re using data standards
to add value. Otherwise, it becomes just another box to check on regulatory
submission, which will do nothing but add cost and extra regulatory burden
to the system. The UDI regulation should be enough to help push broad
adoption of data standards but it’s imperative we move quickly otherwise
debate will continue while patient benefits found within the standards are
left in the balance.
Sargent: Medicare has
stated that there will come a time when the product information will be
required in order to be reimbursed. Capturing the data electronically to
enable information to be processed in a patient bill will become essential
to comply with Medicare regulations once established. If a provider has not
added implementation of standards to their strategic goals at this time,
this will definitely drive them in that direction.
Joshi: As is evident
from the UDI regulation, it helps to have a federal requirement so that the
various entities within the healthcare industry can move forward with a
common goal. With that said, all entities (manufacturers, distributors, GPOs,
software companies and healthcare providers) need to dedicate resources and
commit to implementation. All entities need to understand that data
standards is not a short term project but a long term commitment that will
need continuous dedication of resources and success will have to be
tracked/monitored at continuous time intervals.
Federal requirements on UDI for devices and lot
level tracking for pharmaceutical companies as part of the Drug Supply Chain
Security Act (DSCSA) have definitely prompted the industry towards
implementation. Now, healthcare providers need to take action as the
benefits of standards adoption far outweigh the costs associated with
implementation. Not doing so will continue to result in transactional errors
and lingering losses in supply chain because of lack of visibility into
Time has come for healthcare providers to move
with the industry and adopt GS1 standards with or without federal mandates
DeLuca: Existing FDA
requirements have only yielded a limited set of attributes, which is not
enough of what’s needed for the supply chain to function properly or to
reduce patient risk. Therefore, I don’t believe federal regulations alone
are going to solve the problem. Private enterprise has the power to drive
real change, but those companies will only step in to solve it if they see a
direct benefit to their bottom line.
Great expectations dim enlightenment