Supply chain coalition endorses standards for organizations, products

An industry coalition of providers, suppliers, group purchasing organizations and others has endorsed standards for organizational and product idenfiers intended to facilitate supply ordering and other transactional processes.

The Healthcare Supply Chain Standards Coalition this week selected standards from GS1, an international organization that’s well-known for its supply chain standards.

The healthcare coalition selected GS1’s global location number for organizational identification and its global trade identification number for product identification.

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The lack of standardization, and reliance on proprietary identification systems, has been cited by many healthcare organizations as a significant source of administrative headaches and expense for all organizations in the healthcare industry. After labor expenses, supply cost and acquistion is acknowledged to be the second largest category of expenditures for organizations that provide healthcare.

“With universal standards, every supply chain participant will be able to identify every organization and every product the same way,” said Joseph Dudas, chairman of the coalition and Mayo Clinic’s director of accounting and supply chain informatics.

“This is a monumental step forward from our current state, which leads to tremendous inefficiency, waste and inaccuracy, as well as creating countless opportunities for error,” he added.

Currently, it’s typical for providers and suppliers to apply their own unique identification numbers to supply items and to each other. When that’s multiplied by the thousands of providers, suppliers and distributors in the country, the supply acquisition and distribution process becomes bogged down.

Coalition surveys in the past year found significant interest in both organizational identifiers by 69 percent 129 respondents, and nearly two-thirds said they were considering implementing GS1’s global location number.

Some 26 members have joined the coalition, Dudas said, and the group hopes to build on work that’s already been accomplished to bring consensus around the standards. Included among the members are large organizations representing hospitals or that conduct group purchasing for facilities – the American Hospital Association, Amerinet, the Association for Healthcare Resource & Materials Management, the Coalition for Healthcare eStandards, Consorta Catholic Healthcare Resource Partners, Novation and Premier, among others. Other participating organizations include Mayo Clinic, Ascension Health, Abbott, BD, Owens & Minor, Cardinal Health, among others.

In addition to building consen    sus, the coalition intends to identify early adopters for both organizational and product identifiers. Efforts in 2008 will be aimed at validating business cases involved in the benefits of standardization. The coalition also plans to work with GS1 to enhance standards to meet healthcare’s needs.

Despite the benefits of industry standardization, it won’t be easy to achieve wide-scale adoption, Dudas said.

“There are stakeholders that have invested in other standards, and other initiatives that have come before us,” he said. “Some of our stakeholders have made investments in other approaches, and organizations that have built businesses around the fact that there is no standard. There are also other standards organizations that will defend their existing territory. If you take all these things together, it does make for a highly political environment.”