The Healthcare Hub
By automating consignment and bill-only implant orders, health systems can drive tight collaboration between hospital staff, physicians and suppliers and transform implant management processes holistically.
Implants are a big part of any hospital's supply budget and managing them can be hard work because data for inventory tracking, billing and coding is not always reliable. By automating the processes associated with implants, health systems have the opportunity to achieve significant time and cost savings without compromising patient care. Find out how in this article.
Table of contents
Orders for implantable devices, such as artificial hip and knee components, have long been difficult for health systems to manage. This product category includes a very wide range of items, and they often come in as many shapes and sizes as patients do, greatly increasing the number of variations on a single item. Health systems and their suppliers have long looked for ways to simplify these orders, with the potential benefits that include:
Lower costs and save time by reducing the number of manual touches throughout the order cycle
Better patient care because the right implant is available
Contract compliance on expensive items
More accurate invoices
Better margins on revenue-generating procedures
Recently, supply chain leaders from Froedtert Health, Mount Sinai Health System and Stanford Health Care explained why the time to automate implant orders is now and shared their stories on how they did it.
Health systems have long had the ability to automate ordering of common medical/surgical supplies that are stored at the hospital and replenished as needed. This is done through the GHX Exchange, using purchase orders (POs), and then are billed through invoices.
However, orders for implants are not regularly sent via electronic data interchange (EDI) through the Exchange. Instead, the manufacturer’s sales rep and the provider facility’s circulating nurse separately and manually document the products used in the case.
There are different terms used to describe implant orders in the procurement world, including consignment, bill-only or bill-and-replace. Some devices, especially ones used in the ER, are kept in limited inventory at the hospital and then replaced as they are used.
But usually, they are brought to the hospital on the day of the procedure by the manufacturer’s sales rep. In most cases, the manufacturer bills the hospital after the device has been used in a procedure, and the patient has walked out the door with it.
Currently, managing implant orders is a lengthy process that is time-consuming and error-prone for everyone involved, and it continues long after the procedure. It typically involves paper shuffling between clinical and supply chain teams (sticker sheet or PDF), and emails/phone calls – sometimes even faxes – between the provider and implant manufacturer to process the order, from PO generation through invoicing.
Ordering errors and inaccuracies
Overburdened clinical staff
Inefficient order tracking through email
Pricing inconsistencies and inaccuracies
Longer payment cycles
“This is crazy,” said Michael Tabbert, Manager, Supply Chain, Froedtert Health, when describing their previously manual implant order process.
“It was the piece of paper that was really driving me nuts,” said Jack Koczela, Director of Supply Chain Services, Froedtert Health. “It was watching this piece of paper move from person to person and fax machines and telephone-in orders and the confusion that would ensue that really drove us to want to make improvements.”
As Koczela said, most health systems have “tackled the basics” when it comes to medical/surgical supply automation. That’s why now is the time to address implant orders. “Sutures, styrofoam cups, and all that sort of stuff is pretty much automated but with implant orders we could see that almost none were automated,” he said.
Healthcare technology plays an essential role in streamlining implant orders in healthcare from supply chain operations to the operating room through to the finance department. Here's how:
Value Analysis: GHX can help teams manage and document the objective evaluation of implants. It provides access to clinical evidence and research to inform clinical discussions,
Operating Room Inventory: By reducing manual processes, GHX can help reduce inefficiencies and patient care risks and equip supply chain leaders with better visibility into inventories across all departments.
The Operating Room: GHX’s offer clinical teams with automation tools so they can spend less time managing inventory and more time caring for patients.
Supply Chain Operations: GHX’s can help make the procurement-to-payment process nearly touchless, resulting in more control over pricing and, while improving work-life balance for employees.
Finance Department: With GHX, finance team have the ability to receive all invoices electronically, even with non-integrated suppliers, no matter who they were from or how they were sent.
The Board Room: With physician-level analytics and supply chain efficiency metrics, hospital leader can see which medical devices are being used by physicians, gain an overall picture of OR supplies, optimize inventory turns in high-cost areas and maximize automation.
Over the past two-decades, supply chain has been elevated from a tactical to a strategic function in most health systems. Supply chain leaders are securing seats at the C-suite table, and there is greater recognition among their team members of the critical role they play in patient care delivery.
The increased desire to perform value-added work is another reason why now is the time to automate implant orders, as Franco Sagliocca, Corporate Director Supply Chain, Mt. Sinai Health System, explains,
“Moving a piece of paper around – what satisfaction is in that for an employee today? We have to grow and grow what they do. What's going on with these bill-only orders is they have enabled us to move folks to more value-added positions instead of this transactional stuff.”
Two health systems are leading the charge to transform how they manage implant orders with automation.
Stanford Health Care holds the distinction of being the first provider to have automated all implant orders through the GHX Exchange. Robert Hatkins, Director, Procurement and Dock Services, Stanford Health Care, answered the question, “Why now? Why weren’t we doing this 10 years ago?”
“It’s something that we really wanted from GHX and from suppliers, to be able to send implant orders via EDI,” said Hatkins. “And I think the reason ‘why now’ is because collectively, we’ve finally caught up to be able to do it.”
Being caught up means having the technology in place to normalize line-level data in complex PO transactions, including implant orders. Rammi Gill, Vice President, Managed Services and Customer Care, GHX, commented on Stanford Health Care’s accomplishments.
“Even just a few years ago that would have been impossible both from a technology and scope perspective. What we’ve found, specifically in the Stanford example, is the ability to provide a universal solution which has made it easier to adopt.”
Because providers and suppliers each have their own systems, processes and requirements when it comes to implant orders, it was critical to develop technology that would work not only for one provider/supplier pair, but across all of them.
💡 Watch the Stanford Customer Story
Koczela and Tabbert led the Froedtert Health supply chain team in tackling the challenge of implant orders, starting with one of the health system’s major implant suppliers, Johnson & Johnson (J&J). Through enabling technologies and collaboration with J&J and GHX, they increased their bill-only PO EDI rate by 14% and volume by 412% in just two months.
As they tackled the challenge of bill-only orders in collaboration with GHX and a key member of Froedtert’s Supplier Partner Council, Koczela and his team found as order automation increased for bill-only implant orders, automation increased for standard orders as well. It turns out there is a connection based on perception of trust in the process. With a consistent automated buying process for implant or non-implant, more orders go through EDI.
“From the buyers’ perspective, because those orders weren’t automated, they were telling us they were uncomfortable with the non-implant orders for those same vendors,” said Koczela. “There were certain vendors that maybe 5% of our orders were EDI and once we figured out the bill-only component, then we turned to 98% EDI. Even if only 30% of those orders were truly bill-onlys, the reason why (they became automated) is that the buyers were then comfortable just ‘clicking the easy button’ to send it EDI every single time.”
💡 Read the Froedtert Health case study
Developed by a collaborative workgroup representing leading providers, suppliers and other healthcare organizations, the Consignment Implant Order Automation Guide is the first known recommended practices guide of its kind. It’s designed to help you improve consistency, increase visibility, manage pricing more effectively and better control the invoice-to-payment process.
Transaction automation is essential to digitizing processes, saving resources, and improving decision making. “We know by and large most of the industry still isn't fully automated on implant orders,” said Rammi Gill, Vice President, Managed Services and Customer Care, GHX “But recently we’ve actually had a lot of progress through a combination of technology and some services, along with increased priority.”
Tabbert offered advice to other health systems. “Go talk to a supplier—pick one,” he said. “You work with them, then you bring one on board. Like we brought J&J on board, you bring Stryker, you bring Zimmer. Pick one. Let’s get some momentum behind this.”
Q. Why is it important to automate consignment and bill-only implant orders?
A. Automating consignment implant orders helps improve consistency, increase visibility, manage pricing more effectively and better control the invoice-to-payment process.
Q. What role does technology play in simplifying these orders?
A. Automation technology plays an essential role in streamlining implant orders from supply chain operations to the operating room through to the finance department by eliminating manual processes.
Q. What are the next steps for other health systems looking to automate their implant orders?
A. Find out how to automate consignment and bill-only implant orders with the Consignment Implant Order Automation Guide.