The item master is the bedrock of a supply chain. Without maintenance, it can put patient safety and revenue at risk. When correctly maintained the item master can significantly decrease labor and supply expenses. It can also:
- Improve fill rates
- Increase reimbursements
- Reduce risk to patient safety
- Improve analytics and reporting
- Lower off-contract and non-file spend
With the healthcare industry data churn rate at 30% and the average exception costing a hospital a minimum of $7.61 (per 2022 Vizient study), data accuracy requires a strategy focused on data transformation.
At Meperia, data transformation consists of three key elements:
- Data Normalization: The selection of standardized descriptive terms that ensures the correct identification of a product and all its related attributes.
- Data Enrichment: The addition of key attributes that provide extended knowledge about a product, for example, size, composition, product recall, GTIN and HCPCS coding, etc.
- Data Attribution: The consistent alignment of product data to enable functionally similar or equivalent comparison.
Our hospital members focus on leveraging actionable data to drive change. Here are three tactical best practice tips to build the ultimate item master:
1. Evaluate the spend and lock it down!
- Pull a purchasing history report for the past 12-18 months and identify the most frequently purchased items. That’s your item master foundation. Then eliminate items no longer in use, discontinued or duplicated.
- Now evaluate all the items that are not on contract. Do you know the average, high and low price points for these items? This is great information to have when negotiating with the GPO, distributor or MFG. Lock the pricing down on every possible item.
- Make sure the data is cleansed, normalized, and classified by category using UNSPSC, with the unit of measure, HCPCS, Rev codes, GTIN, etc. You need these data attributes to support the procure to pay processes. There cannot be gaps and missing information. That 30% data churn rate is real and applies to everyone.
- Evaluate the data that each department has access to and create a formulary-driven purchasing process. The goal is to make it difficult for people to order the wrong item. If you can, limit what people have access to at the facility, location and even user level if necessary.
- Daily/weekly – Look at the non-file, non-contract spend closely, identify the right alternative, and eliminate the possibility of the wrong item being ordered again. The hospitals we work with are constantly evaluating the non-file and non-contract spend to remain in control.
- Finally, create a consistent process to identify and add recurring items. Make sure the people you give this power to understand the criteria for adding new items to the item master.
2. Focus on product description and price: For automation and accuracy, people have to be able to find the right product at the right price. Focus on what matters:
- Ensure product descriptions are normalized to a specific standard for your organization (10 words is an industry best practice with most facilities using six or fewer).
- Identify the correct buy units of measure based on usage by location and correlate price to unit of measure, then verify the correct contract price with your GPO, distributor and manufacturer. If anyone is rounding out to the 4th decimal please reach out to me for a conversation!
- Use consistent product classification. Home-grown identification and classification may be the way you’ve always done it inside your organization, but you’ll achieve greater automation and more accuracy using UNSPSC and/or GMDN for classification.
3. Focus on identifying recalls and invoice matching for real results: Patient safety and revenue performance. Patient safety and revenue performance. This is time well spent!
- Measure the percentage of invoices that accurately price match.
- Evaluate the lines that don’t match and fill in the missing billing codes to reduce denied claims. This is always a hard dollar savings opportunity.
- Understand if a product is on recall at the point of purchase and before it hits the warehouse to avoid the problem altogether.
Solidifying processes to maintain the item master is part of building the ultimate item master but so is having a data partner that understands the evolving healthcare landscape. Normalized data is the foundation, but formulary-driven procurement is key to item master performance. I’ve been in this industry for 20+ years and I’m smart enough to know that I don’t have all the answers. The item master can be your best friend or a hospital’s worst enemy but for me, there’s nothing more rewarding than putting together a solid strategy and executing on it. Please share your strategies for building the ultimate item master with me at email@example.com.
About the Author
Lee Ann McWhorter is the Vice President of Business Development at Meperia. Her primary goals are to reduce data error, reduce cost and improve patient safety in the healthcare industry. Lee Ann has worked with the founders of Meperia for over 16 years and understands the breakpoints in the healthcare supply chain and the need for unbiased, quality data moving forward. For more information about Meperia please reach out to firstname.lastname@example.org.