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KSR Publishing, Inc.
Copyright © 2016

         Clinical intelligence for supply chain leadership



January 2013

Standard Practices


Questions can be e-mailed to: editor@hpnonline.com

Called in to Jeannie Akridge at:
(941) 927-9345 ext.202

Mailed to:
HPN Standard Practices
2477 Stickney Point Road,
Suite 315B
Sarasota, FL 34231

A tale of two trading partners

by Karen Conway, Industry Relations Director, GHX

Cook Medical and Intermountain Healthcare are both recognized as leaders in global data standards enablement. In this month’s column, we’ll explore the collaborative relationship between the two, their mutual support for global data standards adoption in healthcare, and the benefits they have achieved from product data standardization.

Push versus pull

Brent T. Johnson, Vice President, Supply Chain & Imaging Services and Chief Purchasing Officer for Intermountain Healthcare, is a vocal advocate for the adoption of standard organization and product data identifiers in healthcare. Intermountain Healthcare is a member of the Healthcare Transformation Group (HTG), a coalition of leading U.S. healthcare systems that are working with each other and with their respective suppliers to accelerate standards adoption across the healthcare supply chain. Johnson says HTG is identifying "laggard suppliers" that are not actively adopting standards and telling them that their healthcare systems plan to withhold business from suppliers that fail to take steps to standardize.

"As someone who came from outside of healthcare, I find it amazing that everyone talks patient safety but as an industry we can’t effectively track products for recalls," said Johnson. "I recognize that it costs money for suppliers to standardize their products but it has to be done."

Intermountain Healthcare has fully enumerated its organizations and locations with GS1 Global Location Numbers (GLNs) and prepared its processes and systems to use GLNs and GS1 Global Trade Item Numbers (GTINs) for product identification both internally and in external transactions with its trading partners. As of October 2012, Intermountain Healthcare was transacting 20 percent of its business with medical-surgical suppliers using GS1 standards.

The organization also recently opened a 325,000 square foot central distribution center to consolidate its purchasing, accounts payable, sourcing and analyst systems operations. Intermountain Healthcare has notified its suppliers that only those that have adopted GS1 standards will be permitted to take part in the organization’s self distribution program.

One supplier that Intermountain Healthcare has not had to push is Cook Medical. Several years ago, around the time Cook Medical was consolidating its operations into one shared service and distribution center in North America, the company’s chief information officer launched an initiative to enumerate all of Cook Medical’s products with GTINs. "We’ve taken this on as a major project to create a more efficient and effective supply chain across the entire healthcare arena, " said David J. Reed, Vice President of Operations and Healthcare Business Solutions, and Corporate Compliance Officer for Cook Medical.

As of January 1, 2013, all products shipped out of Cook Medical’s North American distribution center will be enumerated with GTINs. Behind the scenes, Cook is taking steps to ensure that any products not yet marked with GTINs that are returned and can be resold are relabeled with the GS1 identifiers.

"Since getting our systems in place, we are now helping customers with their own standards transitions," added Reed. "Making sure organizations like Intermountain have the right products when they need them and doing so in an efficient and cost-effective way helps build a better supply chain and lets our customers do what they do best, which is take care of patients."

Johnson says Cook Medical is "ahead of the curve" when it comes to sitting down and discussing how trading partners can mutually reduce costs while driving better patient care through standards adoption and other supply chain initiatives, something he says is common in other industries.

Reed agrees, adding that "There are opportunities to save real dollars that come when suppliers and buyers get in a room, roll up their sleeves and work together. Collaboration is easy to say, difficult to do, but it makes sense for everyone."

From chaos to clarity

Both Johnson and Reed say one of the most important benefits from product data standardization has been better data accuracy and greater visibility into their respective supply chains. "Now we can share information to improve ordering, receiving and payment, demand forecasting and utilization," says Johnson. "Everything is improved when you have good data at every step of the process and don’t have to continually re-verify along the way."

Advice to others

Intermountain Healthcare and Cook Medical have made tremendous strides in global data standards implementation, but they are still in the minority. Most healthcare organizations are still trying to wrap their arms around how they can achieve organization, location and product data standardization amidst competing priorities. When asked what advice they would give to others, Johnson and Reed responded:

"When a customer like Brent says standards adoption is important to him, you’ve got to step up and listen," said Reed. "I’ve been involved in our standards implementation for over four years; so I have an appreciation for companies that are just starting out. It’s a massive undertaking but it’s something that has to be done. It’s a good thing for our industry, our company, our customers and their patients."

"Change starts with senior leadership," said Johnson. "The executives at both Intermountain Healthcare and Cook Medical understood from the very beginning that this is the right thing to do for the industry. And once the senior leadership is on board, everyone else falls in line."

Karen Conway is industry relations director for GHX. She serves on the board of directors of AHRMM, on the leadership council of the Arizona State University Health Sector Supply Chain Research Consortium and as co-chair of the HIMSS Supply Chain Special Interest Group. She is also active in the Strategic Marketplace Initiative (SMI) and a member of the editorial board of Healthcare Purchasing News.