The vision of what broad adoption of global data standards could do for improving the efficacy of our healthcare system isn’t new, nor are efforts to achieve it. The Department of Defense first sought to standardize its supply chain in the early 1990s, to ensure high-quality products in support of troops while improving the supply chain’s reliability, efficiency and cost. Despite these efforts, adoption has been slow and siloed, often limited to what’s mandated by regulators. That may finally be changing, as supply shortages during the pandemic have underscored the need for data accuracy, visibility and sharing across multiple parties.
Beyond helping hospitals and suppliers manage critical supply chain shortages, data standards can also support the move to more value-based payment programs. More than ever, it’s critical to minimize waste, whether from expired inventory or the delivery of care that’s unnecessary, duplicative and potentially harmful.
Here's how standardized data can support a pandemic-ready and clinically integrated supply chain.
Managing shortages. As the pandemic hit, hospitals scrambled to find alternative products and vendors when their traditional supply channels could not meet demand. If hospitals and vendors identified products the same way, buyers could have more easily found other vendors selling the same product. The U.S. Food and Drug Administration has mandated that manufacturers assign and label their products with unique device identifiers (UDI). Unfortunately, many suppliers and providers have not incorporated those identifiers into their order-management and fulfillment systems.
Even if they could find other vendors selling the same products, the unprecedented worldwide demand coupled with production constraints forced many hospitals to look for acceptable alternatives. In these cases, using standards combined with classification schemas, such as the United Nations Standard Products and Services Code (UNSPSC), could help identify other products within the same category.
Inventory visibility and demand planning. During the pandemic, hospitals were required to regularly report their existing inventory levels for personal protective equipment (PPE), burn rate, anticipated demand and expected shipments to their leadership and the government. Had these reports utilized the same identifiers, the collective demand could have been aggregated, helping to illuminate how best to match supply to demand.
Reducing waste. In light of critical shortages, it becomes even more important to ensure that products are used before they expire. Once again, the UDI rule can help. Under the regulation, it consists of two parts: the device identifier (UDI-DI), such as a GS1 Global Trade Item Number (GTIN), and the production identifier (UDI-PI), which often includes the expiration date. Incorporating this information into inventory management systems can help hospitals first utilize products closest to their expiration date.
The use of UDI-PIs could also have helped manage the U.S. strategic stockpile better. During the pandemic, many of the products in the stockpile had expired and were no longer usable. Better monitoring of supplies can facilitate rotation of the stock, redirecting products to where they can be used, and replenishing with products that have longer shelf lives. As the public and private sectors seek (and are in some cases mandated) to increase stockpile par levels, UDI-PIs should be used to help monitor stock expiration dates, ensuring supplies do not expire before use.
Collaborative planning, forecasting and replenishment (CPFR). COVID-19 also exposed the weaknesses of a supply chain where information on existing inventory levels and consumption isn’t routinely shared between suppliers and providers. Hospitals had little to no visibility as to when and how much product would arrive. As suppliers allotted customers only partial orders, providers began placing orders for larger quantities than they expected to receive, further obscuring the demand signal. Even in normal times, lack of data sharing and standard identifiers have prevented healthcare from realizing the benefits of CPFR that have proved so valuable in other industries. Given the magnitude of the challenges during the pandemic, healthcare supply chain leaders are again exploring the capabilities that enabled CPFR in the retail industry: integrating GTINS and barcode scanning into the enterprise resource planning (ERP) system.
Patient safety. Barcode scanning at point of use and incorporation of UDIs can also play a critical role in patient safety. Hospitals that have adopted these capabilities can proactively identify and prevent an expired or recalled product from being used on a patient.
Clinical-supply chain integration. The application of inventory management best practices is at the heart of the clinically integrated supply chain. By capturing what products are used on which kinds of patients, we can generate evidence of what works best. In this way, we can help ensure that the right products are used, while minimizing unnecessary use when the data doesn’t demonstrate effectiveness. This data is also foundational to hospitals understanding their demand and sharing actual utilization data with suppliers, similar to how supply chains in other industries operate.
Value-based healthcare. Perhaps the most impactful revelation of the pandemic has been exposing the frailties of our current fee-for-service (FFS) system. When the government shut down elective surgeries, providers that relied on FFS had their revenue curtailed, which has strengthened interest in moving to capitated models in which providers are paid a set amount to keep patients healthy. To thrive under capitation, providers need to understand what it costs to provide care, and what contributes to better care for specific patient cohorts. This understanding depends on the ability to track care processes, including which products are used on which patients, at what cost and how those products impact outcomes. Gathering key data to perform this analysis requires that we identify products in a standardized manner.
The pandemic has created significant hardship, from the loss of well over half a million American lives to the economic losses faced by businesses. On a more positive note, it has raised awareness of the importance of proven supply chain capabilities, including data standards. With greater recognition of the multiple benefits of data standards adoption, this may finally be the time when healthcare begins speaking the language of efficiency, efficacy and value.
Karen Conway is vice president of healthcare value at GHX.
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