Building the Business Case For Global Data Standards

 One of the greatest challenges that supply chain leaders face when launching global data standards initiatives within their organizations is convincing the C-suite to provide support for the effort. While many recognize that standards can improve operational efficiency, reduce costs and enhance patient safety, there is scarce data demonstrating that healthcare organizations – both on the buy and sell sides of the supply chain – can achieve a quantifiable return on their investments. And without a strong business case, those spearheading standards initiatives face an uphill battle convincing executives to allocate the necessary resources to standardize data and put it to use.

To help provider organizations establish the business case for global data standards, the Center for Innovation in Healthcare Logistics (CIHL) at the University of Arkansas has developed the Levels, Readiness and Impacts Model (LRIM). With LRIM, providers can run various scenarios for GS1 Global Location Number (GLN) and Global Trade Item Number (GTIN) adoption to determine where they can derive the greatest labor savings, inventory accuracy, and other improvements from standards implementation. The system also projects the software, process changes and data-cleansing tasks likely to be required for each scenario.

"The inability to demonstrate an ROI to the C-suite has been a huge roadblock to standards adoption," said Ronald L. Rardin, Ph.D., director of CIHL. "We believe that this tool provides at least a partial answer to the question of ‘What will we get out of our standards investment?’"

How it works
Providers are first asked to enter supply chain process information from which the tool generates a baseline for current process metrics. They can then use the tool to measure the labor and other gains that can potentially be achieved through various scenarios, such as adoption of GLNs and/or GTINs with or without barcoding. For example, if a provider currently deploys 10 FTEs for certain supply chain tasks without standardized data, the tool might indicate that by implementing GLNs and GTINs it can cut the required FTEs down to seven, enabling the provider to deploy these resources to other activities. Adding barcode automation would lead to predictions of even greater savings.

"Your instinct tells you that it makes more sense to have standard numbers but answering ‘why,’ is not that easy," said Dr. Rardin. "This tool gives you the ability to try out a variety of implementation scenarios to determine which ones make the most sense for your organization."

Provider testing and input
In the spring of 2011, Dr. Rardin and his team joined with the Strategic Marketplace Initiative (SMI) to recruit provider organization volunteers to test the LRIM tool within their facilities. Five sites were chosen to participate: Beth Israel Deaconess Medical Center in Boston; Denver

Health and Hospital Authority in Denver; Franciscan Missionaries of Our Lady Health System in Baton Rouge; University of Southern California (USC) Health Sciences in Los Angeles; and Longmont United in Longmont, CO. Each organization was asked to test the same six standards adoption scenarios. Participants were also encouraged to run their own test scenarios based on their individual standards implementation plans and needs.

"SMI was happy to collaborate as this project is well aligned with our mission to advance the healthcare supply chain industry," said SMI Senior Director Dennis P. Orthman. "The LRIM model is the first decision support tool designed to prove the value of GS1 standards. We believe it is a big step toward developing a full ROI analysis for standards implementation and will offer tremendous benefit to the industry."

According to Adam Robinson, clinical contract manager for Beth Israel Deaconess Medical Center, testing the LRIM tool at his organization not only helped CIHL refine the tool, but also opened his eyes to previously unexplored ways of implementing standards in the provider setting.

"We are a just in time (JIT) distribution shop, which means you don’t just have supplies hitting the docks. Instead, you have supplies going to units and closets that have their own GLNs," said Robinson. "CIHL hadn’t initially taken that into consideration so they baked that into the model for institutions that have similar distribution models."

"From a user’s perspective, the LRIM tool presented potential benefits of GLN and GTIN implementation that we hadn’t thought of before, such as improved patient billables," continued Robinson. "The folks at CIHL did a fantastic job of drilling down on all of the various aspects of standards implementation. It is really quite extensive."

At Denver Health and Hospital Authority, the supply chain team had already done the legwork to secure C-suite support for standards adoption and was engaged with suppliers in transacting GLNs at the time of the LRIM tool testing. The tool enabled them to validate the savings data they had generated around standards adoption.

"When we first broached the idea of standards adoption, my boss had difficulty quantifying hard dollar savings that we would gain from implementing GLNs and GTINs," said Stewart Layhe, supply chain project manager for Denver Health. "When we ran the various usage scenarios through the LRIM tool, we realized that our savings estimates were not far off from what the tool generated. It would have been great to have the tool when we first approached the finance board trying to justify the use of GS1 standards."

by Karen Conway, industry relations director, GHX
Healthcare Purchasing News

LRIM today
The LRIM tool is free and accessible through the CIHL website: Providers can download the tool and a user’s guide there to help them get started.

Karen Conway is industry relations director for GHX. She serves on the board of directors of AHRMM, on the leadership council of the Arizona State University Health Sector Supply Chain Research Consortium and as co-chair of the HIMSS Supply Chain Special Interest Group. She is also active in the Strategic Marketplace Initiative (SMI) and a member of the editorial board of Healthcare Purchasing News.

Release date: 1/5/2012