Going for the Gold Standard

By Marla Weigert  |  Posted 2008-10-30

As one of the health care industry’s largest group purchasing organizations, Premier Purchasing Partners is responsible for evaluating products and services and then selecting the most cost-effective solutions. The goal of the Charlotte, N.C.-based organization is to unite a fragmented, chaotic and inefficient health care system.

Seven years ago, frustrated by the lack of industry-standard product, supplier and organization ID numbers, Premier decided to collect data from disparate systems and standardize them based on Premier’s item master list.

Marla Weigert, group vice president, Purchasing Partners Data/Technology, details how Premier streamlined the product information management process and reduced the time and resources spent manually standardizing data.

Premier Purchasing Partners is a hospital performance improvement alliance that’s owned by nearly 200 nonprofit hospitals and health care systems serving more than 2,000 U.S. hospitals and 53,000-plus other health care sites. Our members, which range from small rural health care providers to large inner-city facilities, represent the gamut of medical care.

Since 1996, we’ve helped improve the health of the communities we serve by aggregating both data and purchasing power to accelerate cost and quality improvements. We maintain the nation’s largest clinical, operational and financial database through which members can evaluate benchmarks, identify improvement opportunities and drive positive change. By leveraging our vast information repositories and proactively sharing best practices, our alliance members can stay ahead of changes that could negatively affect their margins and patient outcomes.

We use the buying clout of our alliance to negotiate contracts that reflect best pricing and work with our member hospitals to implement those contracts. This collaboration reduces our members’ staffing needs, improves productivity and ultimately delivers hundreds of millions of dollars in validated savings.

Our primary mission is to drive down health care costs while improving the quality of patient care. We are determined to beat an industrywide statistic that finds nearly half of the costs in the health care products supply chain are “avoidable process costs.”

To attain that goal, we asked the following questions: What are these avoidable process costs? What best practices should we adopt to eliminate them? Is there technology available to reduce these process costs, or would we need to develop our own? How can we deliver more transparency to the entire health care supply chain and lower the probability of paying avoidable process costs in the future?

Though we spend a lot of time and money cleansing and standardizing our product data manually, without universal product data standards, there’s no uniformity in how our member hospitals describe the items they buy and use. Part numbers are often missing or altered, and there are no standard product descriptions for basic supplies and complex medical devices.

The obvious solution would be to implement industrywide standards, but we could not wait for the standards to catch up. So we developed and implemented our own standards to streamline the process and reduce the time and resources spent manually standardizing and matching the millions of products we process daily.

The Standards Gap

In a typical week, we process 6.5 million item records from varied sources, including the unique systems of 2,000 hospitals, 1,200 suppliers, 50 distributors, 10 third-party data suppliers, and our e-commerce partners and data-cleansing companies. The product data, which represents many diverse product domains, includes nearly everything a hospital buys: from basic medical supplies, bed linens, cleaning supplies and cafeteria items to high-end surgical instruments.

But the complexity doesn’t end there. There are no standard product, supplier or organization ID numbers. Every data source (supplier, manufacturer and distributor) may apply different ID numbers to the same item. On the flip side, different manufacturers may use the same number to identify different products.

Even in cases where you expect standards to exist, they don’t. For example, our members purchase supplies from 3M. At one point, we identified more than 200 representations for this company in our members’ product records.

To complicate matters further, there aren’t any standards governing product descriptions or packaging, yet we must identify the smallest unit of use for our analytical computations. Is a bag of cotton balls a unit of one (because it is a single bag) or a unit of 200 (because there are 200 cotton balls in a bag)? Even this seemingly simple data conversion becomes a complex task when there are no standards.

Finally, our members’ information management systems are disconnected: Purchasing systems are not connected to billing systems or to charge systems, thereby compounding the data volume problems when it comes time to cleanse item master lists. By collecting data from each of these disparate systems and then standardizing the data to the Premier item master list, we can give our members the ability to perform the analytics necessary to identify cost-saving opportunities.

A Single Source of Truth

To overcome the challenge of not having universal product-data standards and to reduce avoidable processing costs, we developed a single source of truth: our Premier item master list. This “gold standard” drives efficiencies, eliminates errors and reduces the high costs in the health care supply chain.

When we began the initiative in 2001, we installed an off-the-shelf product information management (PIM) system and a data quality (DQ) tool to validate, cleanse and standardize our data. When this combination proved inadequate, we outsourced data cleansing to four DQ companies. This approach proved too expensive, so we outsourced to a single DQ company.

Our initial approaches met with some success, but they required more manual effort than we expected or wanted. Also, they were not scalable and could not keep up with our ever-increasing data volumes.

A core challenge is dealing with the infinite number of ways an item can be represented. To an expert, “sterile blue latex-free surgical glove” is easily equated to “Surg Glv, blu, ster, L-F,” but to automate this requires a huge effort. Traditional technologies typically fail to recognize changes in word order, punctuation or abbreviation, because they use a pattern-based, or syntactic, approach.

Earlier this year, we implemented a semantic-based approach, the DataLens System from Silver Creek Systems, to automate data standardization—our latest step in using leading-edge technologies to take our overall efficiency to the next level. By automating the recognition and standardization of even the most cryptic data, we can implement our own standards. And when industry standards are eventually established, the system will enable us to adopt them quickly.

In the meantime, we can scale up our operation while reducing costs and delivering improved services to our members. What’s more, because the new technology can “auto-learn” the rules for recognizing new data, we avoid major maintenance costs, such as having IT teams code and maintain hundreds of thousands of rules in several thousand product categories. In addition, these new capabilities will allow us to avoid making wholesale changes to our IT landscape in the future.

Seven years into our PIM journey, our vision remains the same, even though almost nothing from our original implementation is still in place, as we’ve upgraded all the components.

Measuring Benefits

To demonstrate continuous process improvement, we implemented a measurement scorecard that quantifies data integrity improvements, cycle times, throughput and match rates. Using the next-generation semantic-based solution, we have delivered the following process improvements:

  • Match rates immediately increased by 11 percent and are now up by 30 percent.
  • Operating costs have been significantly reduced. We project we’ll save an average of $4 million to $5 million per year.
  • Cycle times for bringing on new customers decreased from an average of 16 weeks to three.
  • Increased automation enables us to cleanse and standardize items manually on an exception-only basis.
  • Since we built business rules at the item level, changes don’t affect other product categories.

Additional qualitative benefits include continually expanding our offerings to our customers, thereby enhancing their satisfaction. We also enjoy a significant competitive advantage in our sales cycles because our expanded services are critical differentiators.

Recruitment efforts are easier, too, because prospective members want access to the accurate data we routinely provide to our members. Finally, our employees feel pride of ownership because they can give answers more quickly based on this reliable data. And working for an organization that is at the forefront of its industry gives a big boost to employee morale.

In the short term, our goal is to adopt the best available technology to deliver the best possible service at the lowest cost. In the long term, we look for ways to drive the definition and adoption of industry standards, which will ultimately eliminate significant costs from the information supply chain.

To help drive industry standards, Premier became a founding member of the Coalition for Healthcare eStandards, which promotes the adoption and use of open data standards in the health care industry. The coalition is now a committee of the Health Industry Group Purchasing Association, which is currently chaired by Premier’s CIO. We also actively participate in the development of standards for global data synchronization.

Premier’s ultimate goal is to fundamentally change the way the health care supply chain operates by bringing more transparency and consistency to all phases of the process. We’ve successfully achieved greater procurement transparency by building an item master database that delivers standardization across highly disparate systems and data sources. Going forward, we plan to link this item master to our benchmarking database of clinical procedures and outcomes to drive transparency into procedural efficiency.

We believe delivering better data improves transparency in the process and helps achieve greater efficiencies. And we are well on our way to achieving this goal for the benefit of our members, the health care industry and, ultimately, all patients.