Healthcare – Data and Spend Management

What we generally see as laymen when we walk into a hospital is a reception, pharmacy, a few rooms with patients and some people walking around in white coats called doctors and nurses. Did we ever imagine what goes into maintaining this hospital and making sure the doctors are able to serve the patients coming in on a regular basis? I can say that the answer is no? with out any hesitation.

So what actually happens at the backend? How do hospitals manage all the data related to inflow & out flow of patients, surgical equipment, finances, drugs and so on? The answer to these questions is Information Technology.

In case of hospitals there is one thing that plays a major role in allowing them to concentrate on patient care rather than critical medical staff tracking supplies from thousands of vendors (manufacturers, distributors); an Efficient Supply Chain Management System?.

SCM represents as much as 15-30% of net patient revenues and changing prime vendors and major suppliers affects an entire healthcare system.

Supply Chain Management is absolutely critical for hospitals and here are a few statistics that prove this fact:

  • Data cleansing accounts for up to 70% cost and effort in implementing data warehousing projects
  • Dirty data costs U.S. businesses $600 billion per year (source: Data Warehousing Institute)
  • Industry average to process PO manually is $75, automated PO is $10-$30
  • 40% of buyer?s time, 68% of accounts payable time is spent on manual processing of PO
  • 25% of hospital supply administration time is spent on cleaning and correcting data inaccuracies
  • 54% of materials management purchases and 35% of surgical purchases are made using EDI/Internet
  • 70% of errors in EDI transactions can be attributed to inconsistencies between product data held by buyers and seller

Healthcare Data Quality Management

Data Quality Management helps hospitals create an Item Master and Vendor Master. It is an enormous task which can be estimated when we understand that there are more than half-a-million products from ~7000 vendors (manufacturers and distributors) being purchased by ~ 5000 healthcare providers in the U.S. alone.

These products can be grouped in categories like:

  1. Administrative & Office Products
  2. Clinical Laboratory Products
  3. Clinical, Professional & Other Services
  4. Medical & Surgical Products
  5. Medical Education & Information Resources
  6. Operations, Support & Architectural Products
  7. Pharmaceutical Products
  8. Others

Bodhtree Consulting Ltd has completed four successful years in Supply Chain Management in engagement with a U.S distributor of hospital supplies. The software application, spend and contract management services and data analytics solutions built on the base of quality data cleansing services we provide have given us insights into the approach needed to handle the issues of data management in the Healthcare industry.

Some of the best practices we recommend based on our experience in this domain are

  • Devise a plan for continuous update of product catalog description
  • Periodically review Product Classification
  • Evaluate functional equivalences – start with high spend PO items
  • Automate relevant processes
  • Revisit contract terms and evaluate better pricing tiers
  • Negotiate contract for items not purchased via contract
  • Schedule parity report for quarterly review
  • Reduce order processing cost – implement electronic orders and contracts
  • Integrate Accounts Payable, Purchasing Systems across IDN
  • Review processes within purchasing departments
  • Implement ‘custom designed’ Analytics on Demand – AOD using industry standard KPIs

It is well known that what you can measure, you manage. Data quality is no different, so first you must define what good data is, then measure, analyze, improve and control it so that you know where you are on the data asset improvement journey at any time. Maintaining data quality is an ongoing process. It is a continuous challenge, but doable with the right processes and commitment.

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