Past Press Releases

CHeS seeks industry-wide set of standards

June 1, 2001 • from Hospital Materials Management

Copyright Business Word Inc. Jun 2001

Hospitals are looking forward to the prospect of supply cost savings, more accurate pricing and contract compliance reporting, and labor savings in purchase order processing

that will come from widespread use of electronic commerce-but right now they feel powerless to pursue that goal on their own. Question after question at a recent seminar on promoting

eStandards-that is, establishment of universal product codes and units of measure among buyers, group purchasing organizations and sellers-related to the frustration materials managers feel in convincing suppliers to join the movement to standardize product descriptions and reporting codes, when the industry itself has no standards. As one materials manager put it, "How can I hold their feet to the fire when I don't know which fire to hold their feet to?"

Signs of progress

But there is a light at the end of the tunnel. In a rare and sometimes amusing display of industry-wide solidarity, VHA Inc., Irving, Texas, hosted a panel discussion by representatives of the year-old Coalition for Healthcare eStandards (CHeS), Ann Arbor, Mich. The setting was VHA's annual Leadership Conference in late April in Los Angeles. On the panel with representatives of VHA, its supply organization Novation, Irving, Texas, and its e-commerce provider, Neoforma.com, San Jose, Calif., was Joseph M. Pleasant, senior vice president of rival GPO Premier Inc., Oak Brook, IL.

Pleasant is Premier's representative on the CHeS board. After receiving a VHA tshirt that he was advised to wear to the office, Pleasant got a chance to field questions from materials managers at VHA hospitals. "Quite frankly, the development of standards has been very slow," he told them. For one thing, he noted, Premier, Novation and most other GPOs have a policy requiring that suppliers use bar codes on products, but they don't always enforce it. Other panelists noted that this has prevented the Dept. of Defense, an early advocate of bar codes, from fully implementing its own policy.

Hospitals lack clout

Another panelist was Garren Hagemeier, executive director of the Healthcare Electronic Data Interchange Coalition (HEDIC). Those standards that do exist are based on industry consensus, Hagemeier said, "but they're not standards until we begin to use them." But, he added, "if other industries can do it, we can do it, too." Hospitals lack clout in forcing vendors to adopt uniform product terms and codes because there is no industry giant (like the retailer WalMart) to take the lead. "Hospitals are a cottage industry by comparison," Hagemeier said. He advised hospitals to start by creating spreadsheets detailing the product information they now have, such as descriptions, product codes and units of measure.

They need to have software that can accept and display such data. "Clean up your data," he advised. "See what you have, then show it to the vendor." Hagemeier noted that other industries have already developed purchasing standards, such as codes to identify units of measure, that hospitals could use now. The universal product number (UPN), or bar code, is another example, he said.

Even though no single format has been universally adopted, and of the suppliers who use them, many still apply UPNs only to cases or pallets, that shouldn't stop a hospital from starting to implement them, he said: "Use the bar code on the case. Don't wait until it's on the box."

What's In a name?

One of the biggest deterrents to establishment of purchasing standards, the panel agreed, has nothing to do with scanning bar codes. What to call products themselves is a subject of dispute among materials managers, vendors, GPOs and clinicians. A major priority of CHeS, the eStandards work group, is to determine exactly which products fall under a certain description, such as "glove, latex, powder-free." In addition to loose terminology within hospitals, one reason for confusion is that manufacturers resist lumping their products under generic-sounding names.

Even where a product name is undisputed, a supplier may assign it a handful of product numbers. Hagemeier recalled a not-unusual case where one supplier had five different codes for a single product, depending on where it was made and how it was packaged.

Keep the faith

This is bad news for materials managers, since GPOs track compliance by catalog number. Thus, a hospital purchasing the product under all five codes gets reported as using five different products. Panelists tried to ward off the sense of hopelessness over standardizing health care purchasing first, by reciting the benefits, in safety, efficiency and savings, that other industries have achieved, and second, by assuring materials managers that CHeS is on the road to success.

Moderator Al Cook presented a case for moving forward now. Cook is chief resource officer at St. Francis Medical Center, Monroe, La., 450 beds. For the past five years, he has used EDI to standardize ordering and payment through integration of the hospital's system with those of distributors and major vendors. St. Francis has eliminated 18 FTEs, reduced inventory by 40%, attained 99.7% accuracy in charge captures in the catheterization laboratory, and saved $500,000 annually on overall supply costs. "What I did with my system is available to anybody," Cook said.

Standards for the world

While supporting the organization now working on product labels-the UPN-and customer identifiers-- the HIN-CHeS has taken the lead in trying to develop common product descriptions, or taxonomy. Common names will be necessary for the success of e-commerce, which depends on a searchable online catalog. The group was invited to submit medical product descriptions by the Electronic Commerce Code Management Assn. (ECCMA), a not-for-profit organization commissioned by the United Nations to develop international classifications for all industries. Recently, however, the UN decided to drop ECCMA and find another agency to administer the classification project.

CHeS has decided to proceed on its own. "We're still proceeding," Burks said, "even though the UN dropped ECCMA. We'll use another administrator." It is important to have a single product taxonomy that crosses industry lines, he noted, because hospitals order more than medical-surgical supplies alone. They order office supplies, food, maintenance products and many other supplies not specific to health care.





		CHeS seeks industry-wide set of standards June 1, 2001 • from Hospital Materials Management ©2001 Bell & Howell Information and Learning Company. All rights reserved. Copyright Business Word Inc. Jun 2001 Hospitals are looking forward to the prospect of supply cost savings, more accurate pricing and contract compliance reporting, and labor savings in purchase order processing that will come from widespread use of electronic commerce-but right now they feel powerless to pursue that goal on their own. Question after question at a recent seminar on promoting eStandards-that is, establishment of universal product codes and units of measure among buyers, group purchasing organizations and sellers-related to the frustration materials managers feel in convincing suppliers to join the movement to standardize product descriptions and reporting codes, when the industry itself has no standards. As one materials manager put it, "How can I hold their feet to the fire when I don't know which fire to hold their feet to?" Signs of progress But there is a light at the end of the tunnel. In a rare and sometimes amusing display of industry-wide solidarity, VHA Inc., Irving, Texas, hosted a panel discussion by representatives of the year-old Coalition for Healthcare eStandards (CHeS), Ann Arbor, Mich. The setting was VHA's annual Leadership Conference in late April in Los Angeles. On the panel with representatives of VHA, its supply organization Novation, Irving, Texas, and its e-commerce provider, Neoforma.com, San Jose, Calif., was Joseph M. Pleasant, senior vice president of rival GPO Premier Inc., Oak Brook, IL. Pleasant is Premier's representative on the CHeS board. After receiving a VHA tshirt that he was advised to wear to the office, Pleasant got a chance to field questions from materials managers at VHA hospitals. "Quite frankly, the development of standards has been very slow," he told them. For one thing, he noted, Premier, Novation and most other GPOs have a policy requiring that suppliers use bar codes on products, but they don't always enforce it. Other panelists noted that this has prevented the Dept. of Defense, an early advocate of bar codes, from fully implementing its own policy. Hospitals lack clout Another panelist was Garren Hagemeier, executive director of the Healthcare Electronic Data Interchange Coalition (HEDIC). Those standards that do exist are based on industry consensus, Hagemeier said, "but they're not standards until we begin to use them." But, he added, "if other industries can do it, we can do it, too." Hospitals lack clout in forcing vendors to adopt uniform product terms and codes because there is no industry giant (like the retailer WalMart) to take the lead. "Hospitals are a cottage industry by comparison," Hagemeier said. He advised hospitals to start by creating spreadsheets detailing the product information they now have, such as descriptions, product codes and units of measure. They need to have software that can accept and display such data. "Clean up your data," he advised. "See what you have, then show it to the vendor." Hagemeier noted that other industries have already developed purchasing standards, such as codes to identify units of measure, that hospitals could use now. The universal product number (UPN), or bar code, is another example, he said. Even though no single format has been universally adopted, and of the suppliers who use them, many still apply UPNs only to cases or pallets, that shouldn't stop a hospital from starting to implement them, he said: "Use the bar code on the case. Don't wait until it's on the box." What's In a name? One of the biggest deterrents to establishment of purchasing standards, the panel agreed, has nothing to do with scanning bar codes. What to call products themselves is a subject of dispute among materials managers, vendors, GPOs and clinicians. A major priority of CHeS, the eStandards work group, is to determine exactly which products fall under a certain description, such as "glove, latex, powder-free." In addition to loose terminology within hospitals, one reason for confusion is that manufacturers resist lumping their products under generic-sounding names. Even where a product name is undisputed, a supplier may assign it a handful of product numbers. Hagemeier recalled a not-unusual case where one supplier had five different codes for a single product, depending on where it was made and how it was packaged. Keep the faith This is bad news for materials managers, since GPOs track compliance by catalog number. Thus, a hospital purchasing the product under all five codes gets reported as using five different products. Panelists tried to ward off the sense of hopelessness over standardizing health care purchasing first, by reciting the benefits, in safety, efficiency and savings, that other industries have achieved, and second, by assuring materials managers that CHeS is on the road to success. Moderator Al Cook presented a case for moving forward now. Cook is chief resource officer at St. Francis Medical Center, Monroe, La., 450 beds. For the past five years, he has used EDI to standardize ordering and payment through integration of the hospital's system with those of distributors and major vendors. St. Francis has eliminated 18 FTEs, reduced inventory by 40%, attained 99.7% accuracy in charge captures in the catheterization laboratory, and saved $500,000 annually on overall supply costs. "What I did with my system is available to anybody," Cook said. Standards for the world While supporting the organization now working on product labels-the UPN-and customer identifiers-- the HIN-CHeS has taken the lead in trying to develop common product descriptions, or taxonomy. Common names will be necessary for the success of e-commerce, which depends on a searchable online catalog. The group was invited to submit medical product descriptions by the Electronic Commerce Code Management Assn. (ECCMA), a not-for-profit organization commissioned by the United Nations to develop international classifications for all industries. Recently, however, the UN decided to drop ECCMA and find another agency to administer the classification project. CHeS has decided to proceed on its own. "We're still proceeding," Burks said, "even though the UN dropped ECCMA. We'll use another administrator." It is important to have a single product taxonomy that crosses industry lines, he noted, because hospitals order more than medical-surgical supplies alone. They order office supplies, food, maintenance products and many other supplies not specific to health care.








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