The Healthcare Hub
Item master data serves as the backbone of a hospital's supply chain and ensuring the accuracy, timeliness, and completeness of this data is paramount for achieving the "perfect order" in healthcare delivery. However, managing item master data is challenging due to the sheer volume of information, ever-changing data inputs and the need for coordination among multiple parties.
Fortunately, advancements in digital technologies and automated processes have improved data quality and streamlined item master management. This article explores the definition, importance, challenges, and best practices for cleaning and maintaining item master data in healthcare, highlighting the benefits of accurate data in optimizing supply chain operations and supporting high-quality patient care.
Table of contents
Item master data definition: Some consider the item master to be the center of a hospital's supply chain universe. At the heart of the enterprise resource planning (ERP) system, the item master contains key information that drives a hospital's business processes: suppliers, products, contracts, and procure-to-pay transactions (POs, POAs, invoices).
Because the item master is the source of truth for data driving a hospital's supply chain transactions, timeliness, accuracy and completeness is critical. Clean data, with no discrepancies, is required to achieve the "perfect order," which is defined as:
“the process by which a purchase order (PO) electronically - from order to payment – occurs without human intervention to ensure it is delivered to the correct location, on time, undamaged, at the correct price with the desired quantity, all on the first attempt."
The ability to purchase the right medical/surgical supplies in the right quantities at the right prices at the right times with supply chain efficiency and have them available for clinicians when they need them is fundamental to value-based care delivery.
While every healthcare organization has its own unique challenges when it comes to item master data management, many of the problems are the same – inaccuracies, duplicates, missing information – in essence “dirty data” that causes errors and rework throughout a number of operational and clinical processes (e.g. procurement, inventory management, patient billing).
The vast volume of data stored within a hospital's item master can be staggering - anywhere from 10,000 to over 100,000 items. Item master data includes both products on formulary - those set up in the item master for the hospital to order - and those in the inventory item category - products that have been purchased from a business and are within the hospital's inventory.
Each item master data record contains numerous product attributes that impact supply chain, clinical and financial operations - supplier company/source of manufacture; production information/manufacturing details; a product description that could include dimensions, weight, storage conditions, materials (e.g., contains latex) and custom fields; contract pricing/costs, etc.
Thankfully most hospitals have transitioned from having an item master librarian manually keying information from product labels or uploading unit data from spreadsheets into the item master and now use automated and electronic means of loading item master data into the ERP system. This has significantly increased data quality in the item master, making it easier for supply chain teams to manage costs, sales data, supply lead times, current stock levels, and additional materials management processes.
When the ERP system is integrated with the hospital's electronic health record (EHR) system so that an item master data window can be opened in the EHR, having accurate and complete inventory data also makes it easier for clinicians to search for a product using a short description, find what they need for their particular area of care, create a requisition, record an inventory item description in the patient's record when used in a procedure, and feed relevant information on products consumed to downstream business systems (e.g., finance, patient billing).
The greater challenge faced in item master data management today is keeping all the key information updated. Data contained within item masters is not static - item data inputs change millions of times per year. The complex healthcare supply chain, which requires coordination and collaboration among hospitals, their suppliers, group purchasing organizations (GPO), and distributors, means all these parties must work to keep multiple sources of data up to date and relevant.
Suppliers make 10 million item data changes every year and GPOs make 30,000 contract changes every month, according to GHX. Then there are constant additions and changes made to global standards for data standardization, including HCPCS (4x year), UNSPSCs (2x year) and GTINs from GUDID information that trading partners must assign and maintain.
These data standards help hospitals and their suppliers track products throughout the supply chain. For example, it is far more easier and efficient for a hospital to search for a recalled product's GTIN in their item master to determine if they have it in their inventory versus using a vague product description (e.g., coronary stent).
All of this data churn can impact not only a hospital's item master or company's item master but also the vast network or related processes and technology systems (manufacturing, purchasing/sales, inventory, warehouse management, etc.).
When there are item master data discrepancies between a hospital and a supplier company, such as purchase price variances, the problems reverberate up and down the supply chain. Transactions are put on hold; product shipments delayed; costs increase as parties must manually intervene to identify and resolve the issues; accounting teams struggle to reconcile invoices to POs; and in the worse cases, clinicians lack the physical products they need to care for their patients. That's why it is crucial for all parties to effectively manage item master data.
Item master management has become easier with the development and use of digital technologies and processes, including electronic data interchange (EDI) transactions. A hospital uses its item master data to generate an EDI transaction (e.g., PO) from its ERP system and sends it via EDI through the GHX Exchange to a supplier company's ERP system.
The company responds back with an EDI transaction derived from its item master data (e.g., POA) through the GHX Exchange, which is received into the hospital's ERP system. This has served as the foundation for the industry wide transition from manual (e.g., emails, phone calls, faxes) to automated processes, and furthered progress toward the perfect order.
The challenge lies in the differing ERP systems and item masters from one trading partner to the next. Data sharing among ERP systems for item master maintenance gets complicated when a company's item master is configured differently from its customers. For example, one particular item has differing attributes from one system to the next. Or the operational intelligence employed by a company in its ERP system differs from that of a customer's system. With highly configured legacy systems, data in item masters can get lost in translation during trading partner transactions.
Some see the current transition from on-premise to cloud ERP systems and applications (e.g., Workday, Oracle, Infor) as a solution to item master quality. But any ERP system is only as effective as the quality of the data in its item master. Transferring junk item master content from a legacy system to a cloud solution will only perpetuate the same problems - and may exacerbate them because the cloud makes it easier to share data among trading partners. With the typical cost of a cloud ERP implementation project ranging between $5M-$20M, hospitals want to do everything they can to maximize their investment - that means making the item master a priority.
Solutions exist today to unify, cleanse and monitor the item master, its data and attributions before making the transition to the cloud. To ensure ongoing accurate data - and consistent data relevant to all trading partners - select a solution that continuously monitors item data and synchronizes updates with your cloud ERP modules. This helps keep information consistent for all users when data is fed to downstream systems.
Maintaining item master data in this way as part of an overall data management strategy is key to the healthcare industry overcoming item master data challenges for more accurate and efficient business transactions between trading partners.
Keeping key information on inventory items (and items on formulary), as well as additional information on suppliers and contracts, up to date helps a hospital's supply chain team provide the most value (high quality/low cost) to its clinicians and their patients. They can:
Optimize business processes (fewer errors, faster transactions)
Better maintain current stock levels (secure products in the right quantities at the right times)
Lower the cost of doing business (less manual intervention, more accurate pricing)
"We’ve reduced billing errors and aligned with industry standards (e.g. HCPCS codes), while improving the efficiency of our data management processes."
Dina Walden, Content Manager | Oregon Health & Science University
Both Catholic Health and Oregon Health & Science University implemented master data management strategies that leverage the GHX's enterprise catalog management solution. Here are their top tips to build sustainable processes that achieve and maintain quality data.
Identify all possible billable items and improve item descriptions to quickly identify items that were billable to patients.
Leverage digital technologies that can help standardize descriptions, with options to abbreviate all or part of it, to circumvent downstream system character limitations.
Work with a multidisciplinary team to come up with unabbreviated, optimized description for every item master product.
Enrich item data with attributes.
Cleanse the data
Identify and clean up recurring inconsistencies and exceptions.
Identify and solve issues with data requirements across downstream, disparate systems (e.g., EHR, billing, point-of-use, etc.).
Working with GHX, Memorial Hospital at Gulfport achieved 95% data accuracy within its item master and 65% of orders purchased on catalog, allowing buyers to spend less time tackling issues and more time supporting clinical departments in procuring the products needed for patient care. Read the case study here.
“On the integrity of the item master for any new items or catalogs, I am able to run a couple of thousand items and get back a result in just 5-10 minutes. And, we are no longer loading duplicate items from the start.”
DeeDee Carter, Item Master Specialist | Memorial Hospital at Gulfport
Piedmont Healthcare reduced contract price exceptions by 70% and overall price exceptions by 81%. They also improved contract validation by 103% and achieved a main distributor Exchange match rate of 93%. Working with GHX, this health system was able to continually clean and standardize data to feed accurate content into their internal systems. Read the full case study here.
"The work we have done to cleanse, normalize and enrich our item master data, and align contract pricing has established the foundation to support our newly established local value analysis teams. The value analysis teams can now compare supply contract opportunities with clinical data and make decisions on what is best for the patient.”
Frido Pagan, Executive Director, Integration, Performance & Systems (IPS) | Piedmont Health Care
Why is Item Master Data important in healthcare?
The item master data record contains information critical to healthcare supply chain transactions.
What are the challenges in managing Item Master Data?
To support efficient and accurate supply chain transactions among trading partners, all parties must engage in item master data maintenance to keep this information up to date, accurate and complete. The main challenge is that data needed for the item master is constantly changing. It is virtually impossible for any party to manually keep their item master updated, let alone synchronize this information with their business partners so they are all consistently speaking the same language in terms of products and pricing.
How can healthcare organizations clean up and maintain their Item Master Data?
A hospital can take control over its item master by embracing digital technologies that automate data standardization and maintenance. To keep its item master content synchronized with trading partners, a hospital should choose a solution that derives data from a collaborative and credible supply data catalog accessible to all parties (e.g., suppliers, distributors, GPOs).
What are some successful examples of Item Master Data management?
The 2023 GHX Summit featured presentations by hospitals, suppliers and cloud ERP providers on successful item master data management initiatives. To view these presentations, visit the GHX Summit on Demand 2023 site.
Disclaimer: The third-party contributor of this piece is solely responsible for its content and accuracy, and the views expressed do not necessarily reflect the opinion of GHX.