Value-based healthcare demands a new approach to item data management

by Karen Conway, Vice President, Healthcare Value , GHX

egulatory and market demands for more real world evidence (RWE) on product performance and chang- ing reimbursement structures are neces- sitating changes in how providers have typically managed product item data. The drive for RWE on medical devices has been enabled by the U.S. Food and Drug Administration regulation requiring manufacturers to label their products with unique device identifiers (UDIs). It was further strengthened by regulations from the Office of the National Coordinator for Health IT (ONC) and the Center for Medi- care and Medicaid Services (CMS) requir- ing electronic health records to hold UDIs for implantable devices in electronic health records (EHRs) and providers to share that data as part of the Common Clinical Data Set (CCDS). With data on products used in patient care in EHRs and subsequently registries, researchers can study how spe- cific medical devices perform in routine clinical practice. Their research can assist providers in sourcing the best products for specific patient populations and more effectively managing recalls, while helping manufacturers design and market prod- ucts based on real world performance. Effectively capturing and managing data about products used in patient care can deliver a range of benefits for providers, from more complete charge capture to calculating costs for delivering care. Bill Mosser, vice president of supply chain services for Franciscan Missionaries of Our Lady Health System (FMOLHS), says hospitals and health systems have traditionally not been required to understand the true cost of an epi- sode of care. They were simply paid based on the services performed. As a result, he says, they have not historically built systems to enable that capability. That approach no longer works with ad- vanced payment models, such as bundled payment where providers will be paid a target price lower than what CMS has historically paid. To manage toward a target price, hospitals and other pro- viders involved in the episode of care


need to understand not only their actual costs but also how variation impacts both cost and quality. Knowledge about what drives that variation, e.g., the patient, the physician, the products used, etc., can in- form care pathway redesign. The process begins by collecting data at the individual patient level. As healthcare systems gather data across many patients and procedures, they can explore relationships between multiple factors, including but not lim- ited to patient co-morbidities, physicians, facilities, products used, lengths of stay, complication and infection rates, readmis- sions, etc., all of which lay the groundwork for more advanced predictive and pre- scriptive analytics to further improve the cost and quality of care. Supplies can make up a significant por- tion of the cost of some procedures, mak- ing data on products consumed critical to patient-level cost accounting. To ensure that its EHR has up-to-date and compre- hensive data about all of the products used in patient care, FMOLHS chose to use a cloud-based or virtual industry item master as the source of the data as opposed to its on-premise ERP item master. To do otherwise would have required FMOLHS to increase the size of its ERP item master nearly five-fold. Instead, FMOLHS follows best practice and limits the products in its

ERP item master to those most frequently purchased.

Perpetual Inventory

PAR Stock Inventory

Routinely Purchased Supplies

Clinical/ Procedural Supply Universe

Best Practice ERP Item Master Management

Best Practice EHT Product Data Management

Electronic health records need access to data on all products used in patient care, not just those typically managed in an ERP item master.


The product data needed by the health system to perform various functions comes from a variety of internal and ex- ternal sources. The virtual item master provides the external data, which includes attributes published by manufacturers to the Global UDI Database (GUDID), as well as additional attributes not typically provided by manufacturers but which are relatively standard across the industry, such as UNSPSC and HCPCS codes that are used for classification and claims, re- spectively. But this data is still not enough for hospital systems to perform all of the necessary activities and analytics related to product usage. For that reason, FMOLHS has also deployed technology to bring in additional data elements that are specific to its own organization, such as contracted unit price, revenue and charge codes, and flags indicating whether a product is bill- able. Getting this data right has important downstream impacts, e.g., ensuring com- plete charge capture. Another critical component is the ability to accurately scan product barcodes at the point of care and ensure those scans link to the data needed by the healthcare system. To address this issue, FMOLHS undertook a concerted effort to make sure it could scan every product used in the periopera- tive environment. FMOLHS is now getting more than a 98 percent successful scan rate with linkages to needed product data. Mosser, who previously worked in the automotive industry, believes the healthcare industry has to go back to fundamentals and embrace what the manufacturing industry has known for decades – that the only way for an organization to be profitable is for it to know exactly what it is spending to deliver its product/service and the value that the consumer, in this case the patient, received. By integrating supply chain, clinical and financial data on the products used in patient care, FMOLHS has taken im- portant first steps toward answering those questions. HPN

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