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KSR Publishing, Inc.
Copyright © 2016

         Clinical intelligence for supply chain leadership



October 2014

Standard Practices




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

Called in to Valerie Dimond at:
(941) 927-9345 ext.202

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

Are we being short-sighted?

Comparing the costs and benefits of UDI

by Karen Conway, Executive Director, Industry Relations, GHX

We’ve been talking about the benefits, as well as the costs, of the Food and Drug Administration’s (FDA’s) Unique Device Identification (UDI) Rule for years. Even now, as the rule is being implemented, the discussion, and debate, continues. In my opinion, we have spent far more time focused on the costs, which could delay our ability to realize the myriad of benefits that we can achieve from being able to more accurately identify medical device. I am not diminishing the significant expense in time and money that manufacturers are already incurring to establish systems to comply with the regulation in an ongoing and sustainable manner. Nor do I think it will be easy for healthcare providers to make the systems and process changes needed to use the unique identifiers. But I believe UDI adoption by healthcare delivery organizations is critical to achieving the "Triple Aim," the framework developed by the Institute for Healthcare Improvement that calls for simultaneously:

  • improving the patient experience of care (including quality and satisfaction);

  • improving the health of populations; and

  • reducing the per capita cost of health care.

I think the word "simultaneously" is key. It’s not about waiting for manufacturers to fully comply with the regulation before healthcare providers start thinking about how they will adopt the identifiers. These things take time, and in healthcare we don’t have a lot of time to change a system that impacts both personal and financial health. We need to work concurrently to make it happen.

As the Association for Healthcare Resource & Materials Management (AHRMM) Cost-Quality-Outcomes (CQO) Movement has identified through case studies and leading practices, sometimes spending more on products can lead to lower overall costs by reducing infection rates and/or readmissions and in turn improving reimbursements. But not always. The question is: How would you know if you cannot accurately identify what product, purchased at what price, was used on which patient, and what were the resulting total costs, quality and financial (reimbursement) outcomes?

That’s where UDI can play a fundamental role, but only if it is incorporated across systems and processes, including supply chain, billing, reimbursement, adverse event reporting and comparative effectiveness research, among others.

In a new video released by The Pew Charitable Trusts, Mercy says it has discovered benefits far beyond what were originally expected — for supply chain, clinicians, payors and patients. The Missouri-, Arkansas-, Oklahoma-, and Kansas-based system launched a pilot in 2012 to study the use of UDI for cardiac stents. The effort included incorporating the Global Trade Item Number (GTIN), one of the standard identifiers deemed UDI compliant by the FDA, in its supply chain (ERP) system, inventory management system, billing system, and electronic record system (which feeds the national product registries like the American College of Cardiology’s CathPCI registry. While not always easy — some technology systems do not seamlessly share data, and it required some process changes for nursing and other staff — the results were compelling.

Inventory management

When Mercy first started the project, inventory in one of the Cath Lab locations was documented on the General Ledger through annual physical count at $800,000. When they began capturing the UDI in the point of use system, they found the inventory levels to be much higher, in excess of $2 million. By applying inventory management practices, Mercy has reduced those levels and achieved both hard dollar savings and operational efficiencies, something Curtis Dudley, vice president of performance solutions, says would not have been possible without the use of UDI.

Nursing workforce satisfaction

Using a scanning system to capture UDI-like data on products used in patient care has increased nursing workforce satisfaction, according to Lisa Hutchinson, director of cardiac Cath Lab and Recovery Unit for Mercy: "It’s a simpler and more efficient process that allows nurses to spend more time on patients." Even when nurses had to scan a product a second time to get it into the inventory system (something that will eventually be rectified through better system integration), Dudley says the nurses save time in the end: "Now they can simply run an inventory report, rather than counting products by hand."

Better billing, better data

Joe Drozda, MD, who leads outcomes research at Mercy, says having the UDI on claims would yield a number of benefits. "Right now, all insurance companies know is that a beneficiary had a total hip or a stent implanted, but they have no idea about the device itself. If they had a UDI on the claim, they would know exactly what that patient received, and they could tap into databases to assess the performance of that device. They would be able to use it not just for cost control, but for improving patient care."

National insurance carrier Aetna agrees. In testimony to the National Committee on Vital and Health Statistics, Stuart Kilpinen, executive director of national contracting for Aetna, said UDI in claim transactions would provide a number of benefits, including giving doctors and patients more information on quality and costs, and allowing plans to provide members with better cost and out-of-pocket estimates prior to the service. I can only assume that would also help hospitals better predict and respond to both consumer and government demands for more information about the cost and quality of procedures and have better data to make changes to improve both.

View the video.

As the executive lead for industry relations at GHX, Karen Conway works with industry associations, standards bodies, government agencies, analyst firms, academic institutions and the media to identify opportunities for hospitals and suppliers to optimize supply chain operations and improve business and clinical performance. Conway was recently elected to a three-year term on the board of directors for AHRMM, the supply chain organization for the American Hospital Association. She also serves 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. In addition, she is active in the Strategic Marketplace Initiative or SMI and serves on the editorial board of Healthcare Purchasing News.