Health-care sector enhances EDI infrastructure

An Ontario medical organization is using Web technology to improve its product ordering system, but isn’t paying a dime for it.

London, Ont.-based Healthcare Material Management Services (HMMS) is augmenting its existing electronic data interchange (EDI) solution, which manages medical

supply inventories from almost 80 vendors, with a business-to-business (B2B) portal supplied by Global Health Exchange (GHX).

Westminster, Colo.-based GHX is a conglomerate equity-owned by Johnson & Johnson, Baxter International Inc. and nine other medical supply manufacturers. Through the provision of its B2B portal it aims to pare down supply chain costs for both hospitals and its member companies.

“”A lot of our business is very time sensitive, particularly in operating rooms, cardiac care and radiology where we don’t carry an awful lot of inventory,”” said HMMS general manager Mike Rosser. “”We really depend on the suppliers to get the product to us next-day. The difficulty we have is just being able to track the orders.””

HMMS, which began in 1997 as a joint venture between the London Health Sciences Centre and St. Joseph’s Health Care, now supplies 26 hospitals in Ontario. The GHX system will reduce order errors and therefore expedite the delivery of medical supplies and increase the number of orders that can be placed, according to Rosser.

The current system transmits information through a modem via an EDI mailbox service called Carenet, a technology developed by Bell Emergis. “”The limitation with EDI is that it doesn’t give you a whole lot of information to track the shipments,”” said Rosser. “”That’s one of the reasons we wanted to get involved with a Web-based application.””

With the Web system, a purchase order can be entered to determine when the order was placed and what carrier will be handling the delivery. By using a vendor-owned exchange, HMMS can reduce some of the complexity of dealing with multiple medical suppliers. “”If we were to do this independently, we would have to do it with dozens of different suppliers,”” Rosser says. “”You can imagine the IT nightmare it would be to try to work with individual vendors to access their Web sites or set up a marketplace on our own.””

The vendors stand to save substantial transaction costs themselves, Rosser notes. “”I think it was a defence mechanism by the vendors to set up GHX to control the cost of doing business with hospitals. I think that’s the basic reason why they’ve set themselves up,”” he says.

Nils Clausen, GHX’s director of sales and marketing, says, “”It’s really process-cost savings that we’re focused on. That will benefit not only suppliers, it will benefit distributors, providers as well as GPOs (group purchasing organizations), when they get involved as well.””

The company will also benefit from the B2B subscription fees they charge to the 28 medical distributors it has signed up to date. One of those companies, Toronto-based Medical Mart Supplies Ltd., will be the first to use the system in conjunction with HMMS when the system goes live next month.

The GHX solution must be tied into HMMS’ existing EDI infrastructure so that invoices can be matched with receipts and order information already in the system, says Rosser. But the technology itself, since it’s Web-based, is relatively simple to install, says Clausen. It’s a matter of supplying a GHX dial-in number.

The next stage of the project will be enabling the system to work with online vendor catalogues. By having images of medical equipment to work from, order errors can be further reduced, says Rosser.

Last October, GHX beta-tested its solution at Victoria General Hospital in Winnipeg. The company is also using the exchange with a number of American hospitals.

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