The Healthcare Hub

GHX provides a wide range of perspectives on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare.

Wednesday, October 21, 2009

A View from the UDI Conference: "Eating the Big Frog"

I just finished attending the UDI Conference 2009 in Orlando, Florida. UDI stands for Unique Device Identification, which was mandated by Congress in 2007 as part of the FDA Amendments Act. The purpose of this part of the legislation is to require medical device manufacturers (and medical devices is broadly defined) to include an identifier on their product labels (again a broadly defined term) that enables a product to be uniquely identified through distribution and use. (The proposed rule is coming out “soon” according to Jay Crowley, the individual at the FDA in charge of this initiative.) A primary benefit of the UDI is better recall management, but there are many other areas of value, including taking the first step toward documenting which devices are used in patient care in electronic medical records (but that’s a topic for another day...stay tuned).

The conference, as I said, is about the UDI, but many of the discussions on the dais and in the hallways have been about standards in general, and in particular, GS1 standards to uniquely identify locations and products in the healthcare supply chain. They are the Global Location Number (GLN) and Global Trade Item Number (GTIN), respectively. GS1 is a global standards body, HIBCC another, although from our vantage point, a preference for GS1 standards has been gaining momentum among industry players over the past few years. A key driver has been calls from major group purchasing organizations (GPOs) and healthcare systems for suppliers to use GLNs in business transactions beginning in December 2010. The onus would appear to be on the suppliers, but in reality, the responsibility is on hospitals and healthcare systems.

One of the key benefits of GLNs is that they will significantly reduce the myriad account numbers that hospitals must manage for their ship-to and bill-to locations. One healthcare system executive told me her organization currently manages more than 450,000 different account numbers for just 100 locations. That’s because each supplier assigns different account numbers for the same customer locations, e.g., receiving docks, warehouses, etc. With GLNs, a hospital, at least theoretically, would only have to manage one GLN for each of those locations, and all its suppliers would have to use that GLN when referring to that location. But herein lies the rub. Hospitals must assign and maintain GLNs for each of those locations, and the switch is not as easy as you might think.

GHX hosts an industry standards users group, with well over 100 members (including suppliers, providers, GPOs and technology companies). As they have studied what it takes to use GLNs in order-to-cash transactions, they’ve uncovered some challenges. For example, often a single supplier will use multiple account numbers for the same customer location. Sometimes there are good reasons for this; other times, not. But the bottom line is it’s not simply a matter of swapping out account numbers from multiple suppliers with a single GLN. 

Hospitals will have to work with their suppliers to resolve many of these issues, but the overall responsibility now and going forward will be on hospitals to assign, maintain and communicate those identifiers. As one of my colleagues in attendance at the UDI conference said yesterday, this is going to require a major paradigm shift. I’d like to hear about whether this is an issue at your organization and how you are addressing it and/or if there are other related topics you would like suggest for future educational papers. Standards can and will be great for the healthcare industry, but it will take some effort. Perhaps one of the speakers said it best yesterday, “If you have to eat a frog, don’t stare at it too long. And if you have to eat two frogs, eat the big one first.” GLNs can certainly be considered a big frog.

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Karen Conway

Vice President, Healthcare Value