Customers looking to save money and ensure that all orders observe contractual compliance during the healthcare supply chain purchasing process have a tool at their disposal that can be utilized to achieve both goals.
Units of measure – also known as UOM – are used to quantify and track inventory items during the purchasing process. There are numerous UOMs in the healthcare supply chain, including packs, cartons, boxes, cases, pallets, and eaches, which is a term used to describe a UOM in which each individual piece is tracked as a quantity of one in a computer system.
The hierarchy of units that describe how an item is packaged when it is shipped during the supply chain process is known as its packaging string. This represents the units of measure for an item in a particular transaction. An example of packaging string – provided by Oracle – might be EA 10/BX 25/40 CS/PLT, which represents 10 each of an item in a box, 25 boxes in a case, and 40 cases in a pallet.
Each hospital or health system might purchase items at different levels – for example, one might purchase at the carton level, while another might buy at the case level, depending on the item. Therefore, having the correct UOM information can be crucial to ensuring that a hospital or health system is remaining contractually compliant during the ordering process and not being over- or under-charged for an item.
The Importance of UOM
There are several benefits of having accurate UOM data during the ordering process – such as allowing customers to order in multiple units of measure and improving reporting on contracted spend.
For example, a group purchasing organization (GPO) – an entity that helps healthcare providers realize savings by negotiating discounts with vendors through the aggregation of purchasing volume – might say that a particular item is under contract when it’s bought by the case. If a customer wants to purchase an each of the item, it might not show as being under contract. Having the UOM data enables the customer to understand how they can purchase the item in a manner that is contractually compliant.
Therefore, GPOs are helping health systems and hospitals by providing the UOMs at which manufacturers are selling items, enabling health providers to remain contractually compliant while placing orders.
However, no two manufacturers are the same, and the manner in which they label a UOM might be different – for example, one might refer to a case of items as CA, while others might call it CS. This can potentially lead to mismatches or ordering issues and create additional work for the supply chain. One potential way to combat such instances would be data normalization or cleansing to ensure that the information the GPO is sending matches what a customer uses in their ERP.
How Prodigo Can Help
Most health systems have relationships with some of the top GPOs in the United States, including Vizient, Premier, and HealthTrust Purchasing Group. In an effort to help its customers realize savings and remain compliant, Prodigo Solutions has recently began working with GPOs to provide accurate UOM on items. Prodigo customers who are able to utilize this UOM data include those using Prodigo’s Navigator platform or Data Hub platform, which leverages Navigator for storing data.
To benefit the customer, Prodigo takes feeds and serves them into Marketplace for the user to order. The UOM enables the customer to order in the right amount. For Navigator, on the analytics side, UOM is a key indicator for spend matching, and helps the customer understand what is being bought. It will assist them by giving them more visibility into contract utilization.
Unless a customer knows how much quantity is in a particular UOM – for example, how many boxes of a particular item are in a case – they likely won’t get an accurate cost. It’s important that customers are charged the correct price for an item. No one wants to be overcharged, but undercharging is also not desirable because it creates more work on the back end and often results in someone having to physically reconcile a purchase order or invoice.
Having access to the correct UOM when placing an order saves money, time, and effort, and in the process helps to keep customers contractually compliant. Working with GPOs, Prodigo can assist its customers with this important data.
GPO Integration: The Most Important Attributes – Houston Methodist (2021 User Conference Session)