The impact of clean, well-managed healthcare data on patient outcomes is more significant than you might think.
Item master data management and data governance are taking on a bigger role in the healthcare supply chain. This is being driven by the shift to value-based care. Under this model, hospitals strive to better understand the total cost of delivering care to patients while identifying ways to balance cost savings without compromising health outcomes.
Striking that balance requires a tremendous amount of data. While healthcare providers are awash in data, the challenge is ensuring its accuracy and integrity. Without it, hospitals can’t make the most informed business and clinical decisions.
Yet when healthcare providers are armed with accurate, clean, and well-managed data, they make more strategic decisions across the organization, including sourcing and purchasing. It also allows clinical and supply chain teams to move toward an integrated clinical supply chain. Essentially, this refers to an interdisciplinary approach to delivering patient care with the highest value and minimal waste at the lowest cost. Data to support decisions in a clinically integrated supply chain will have a ripple effect. One that’s carried throughout the healthcare ecosystem, potentially benefiting every patient.
Item Master Data Management in the Healthcare Supply Chain
The process starts by mapping out a plan, goals, and performance metrics to measure progress.
To establish benchmarks, healthcare providers can assess their current performance based on industry-standard metrics. Having this insight at the onset of the initiative allows the healthcare provider to develop a vision and communicate it to the cross-organizational team, including their role in advancing it.
Next, establish a structure to continually monitor, cleanse, and standardize the item master data to ensure data is accurate, complete, and current. Specifically, normalize product descriptions and identify duplicates and inactivate items that haven’t been ordered in a long time – 24 months, for example.
Taking this a step further, attach your organization’s standard coding system or general ledger codes from accounting to product data. This makes it easier for finance teams to receive reimbursement details that can be used for revenue capture.
When this insight is extended to supply chain, enterprise resource planning (ERP), electronic health records (EHR), finance, and clinical data, it will improve a healthcare provider’s entire procure-to-pay process. By providing greater visibility into purchased items and pricing, healthcare providers will have a much deeper insight into whether they’re getting the most clinical and cost value from their supplier contracts.
Collaboration Drives Contract Alignment for Piedmont Healthcare
Take, for example, privately-held Piedmont Healthcare. The Atlanta-based not-for-profit has nearly 600 locations and serves close to two million patients. Like most healthcare providers, the cost per case is influenced by contract price and line item, so the data must be accurate and up to date to ensure optimal savings.
Piedmont engaged in a data management governance strategy to establish a process to cleanse and enrich item master data. The goal is to have accurate, complete, and up-to-date information to inform sourcing and purchasing decisions.
This required consistent collaboration among key groups. Chief among them are the integration, performance, and systems (IPS) team and the supply chain sourcing team. Also, working closely with finance, Piedmont’s data management effort influences its entire procure-to-pay process.
This approach gives Piedmont greater visibility into purchased items and pricing, which influences how items are received into its system and how invoices are paid. It also allows them to immediately identify opportunities to improve contract alignment with distributors. Additionally, Piedmont’s sourcing team is able to easily upload contracts and product and pricing data in the ERP system to validate pricing. Any price exceptions can be electronically coordinated between the healthcare provider and its distributor and supplier trading partners. The data informs EHR and point of sale solutions and support clinical decision making.
The ability to validate contracts enables Piedmont to uncover savings opportunities and present them to the organization’s clinical and executive teams knowing the recommendations are based on accurate data.
An item master data management and governance strategy enables Piedmont to see increases in contract validation by 103% as well as the following reductions:
The integrity of product and pricing data can positively affect value analysis efforts by strengthening trust and collaboration between supply chain and clinical teams. It also provides insight into how the healthcare organization is performing against industry benchmarks.
- Contract price exceptions by 70% (down to 5%)
- Overall price exceptions by 81% (down to 6%)
- Overall exception rates by 62% (down to 14%)
- 67% in price exceptions
- 41% in back order exceptions
- 22% in part number exceptions
- 7% in unit of measure (UOM) exceptions
When healthcare providers cleanse, normalize, and enrich item master data and align contract pricing, they can establish the foundation to support the entire healthcare organization. They can also compare supply chain contract opportunities with clinical data and make product selection decisions based on what’s best for the patient – not just cost.