Two decades ago, a few healthcare supply chain partners decided to automate basic transactions so that they could improve efficiency and accuracy and reduce costs – and the GHX Exchange was born. Today over 10 thousand supplier divisions and 19 thousand provider facilities use GHX standards to automate the four core supply chain documents: The purchase order (850), purchase order acknowledgment (855), advance ship notice (856) and invoice (810). These “basic” supply chain transactions encompass the processes around placing an order, delivering the products and billing for those products.
While the healthcare industry saves $1B annually through automation of these basic supply chain processes, we are still missing out on a major opportunity for cost savings in the area of pricing alignment and reconciliation. Thousands of contract price changes happen each day, and manufacturers, distributors and providers attempt to manually reconcile them within their systems, which is quite frankly impossible to do. The advanced transaction sets required for contract price alignment are complex, labor intensive and, without any standards or automation, generate significant work, rework and costs for all parties involved.
So what do I mean by “advanced” transactions? Let’s take a look:
As evidenced by the above transactions, pricing alignment in healthcare is highly complex, time and labor intensive, and prone to human error when all of the parties to a contract are manually communicating ever-changing information with one another, and attempting to keep it updated and synchronized within their various systems. The operational and financial burden impacts everyone in terms of:
So why hasn’t the industry done anything about it?
Well, in fact, it has. The Health Industry Distributors Association (HIDA), recognizing the industry need for standardization in the contracting process, has collaborated with over 120 organizations throughout the healthcare supply chain to develop best practices for pricing alignment that promote automation of these advanced transaction sets.
In the next blog post in this series, I will present information on HIDA’s price alignment standards, and why 2019 will be the year for action among healthcare stakeholders.
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