Why regulation may not be enough for standards adoption

Jan. 21, 2022

Those who have followed this column for more than a few years know that many of the articles have focused on the adoption of product data standards, including unique device identifiers (UDIs).  In this month’s column, we return to that perennial subject, this time informed by new insights from the trade association SMI.  In late November, SMI specifically asked about the barriers and drivers to greater provider adoption of product data standards.  Unfortunately, the responses were not drastically different from what we have seen and heard before, and in some cases, they may signal a continued lack of common understanding and/or communication between trading partners on the topic.  

Interestingly, while the survey focused on how to advance provider adoption of the standards, the hospital and health system respondents were far more likely than their supplier/industry partners to consider standards adoption critical to advancing supply chain performance.  This could have something to do with the fact that the provider SMI members are responsible for supply chain operations, while the supplier/industry respondents are more commercially focused. 

There were a number of other disconnects between the respondent types, but one area of consistent agreement was around the role of regulation, with many saying that nothing short of a government mandate would move the needle.  I have always found this longstanding argument a bit of a paradox.  Both providers and suppliers are generally regulation resistant, and yet those supporting standards adoption frequently call on the government to do more in this area.  Based on some early research I conducted for a Masters in the Science of Healthcare Delivery, there are some other questions about the impact of regulation.  In highly regulated environment, while compliance is essential, some research suggests it can lead to prioritizing “checking the regulatory box” over achieving value beyond compliance.

This prioritization of compliance over value is something the U.S. FDA did not anticipate.  In fact, according to Jay Crowley, who helped write the UDI regulation, the FDA expected the industry to self-organize around building a system for using UDIs using the regulation as the cornerstone.  That, he says, has not happened.  And to my point earlier, it may be why there are disconnects between the provider and supplier responses, including the perennial finger-pointing as to which party is the hold-up.

There is one common value point being discussed by both parties that has been relatively ignored in the past: the value of the product data standards for demand planning.  In the SMI survey, providers overwhelming ranked the lack of a good demand signal as the biggest challenge faced by suppliers as the result of low provider product data standards adoption.  I did ask manufacturers about the value of UDI for demand planning in 2017, for a Capstone research project for the U.S. FDA.  At the time, nearly one-third listed improved demand planning/inventory management as a benefit of UDIs.  But when you split the respondents based on whether they conferred with hospitals about how they would use UDI, the percentage among those who engaged with customers jumps to more than 61 percent, compared to just over 15 percent for those who had not discussed the use of UDI with their customers.  Of some concern is that only one-third of those who engaged with customers on UDI said their companies had incorporated UDI into their demand planning/inventory management systems.  Providers, too, struggle with technology limitations in their pursuit of greater UDI adoption, and this could be a topic for trading partners to collaborate.  For those interested in learning more about the role of standards for demand planning, check out prior issues of Value.Delivered. in the April 2020, September 2020 and December 2021 issues of HPN (available here).

The pandemic has elevated the stature of demand planning/inventory management, and based on the SMI survey, both providers and suppliers already recognize the positive role UDI can play.  One way to get the conversation going is by asking some of the questions envisioned by the FDA, as well as those in the SMI Survey: 

  • “Who needs what to make the system work?” 
  • “What are the obstacles to meeting those needs?”
  • “How can we work together to overcome those obstacles?”
  • And most importantly, “How can we build the business case by demonstrating value for multiple stakeholders and purposes?”

Some of these questions have already been answered (at least in part) by researchers and organizations like the AHRMM Learning UDI Community.  But clearly those communications are not happening at a broad enough level to overcome perceived, let alone, real obstacles.   Given all that healthcare has been through during the pandemic, especially the proven ability of organizations, even competitors, to come together in record time to achieve a common goal, I am more confident than ever that we have the ability to make UDI adoption and value realization a reality.

About the Author

Karen Conway | CEO, Value Works

Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends.  After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.