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SPANNING THREE DECADES OF VALUE MANAGEMENT LEADERSHIP

June 13, 2002

SUPPLY CHAIN’S WEAKEST LINK:

DATA QUALITY

Is Your Data Quality Holding You Back From

Great Leaps Forward In Savings?

Robert T. Yokl, President, The HCP Group, Ltd.

Thousands of healthcare organizations have upgraded their MMIS systems in the last 10 years so that they could manage multiple inventories, track non-stock purchases and automate their requisition to accounts payable functions in real-time to greatly increase their productivity. However, what hasn’t improved, but has gotten worse over time is the quality of the data that is streaming through these MMIS systems.

Poor Data Corrupts Even The Best MMIS Systems

Your new MMIS system has given you more speed, connectivity, and technical prowess, but it has also given you more typos, translation and logic errors and software glitches than you ever dreamed were possible. Not infrequently a combination of human errors and system architecture inadequacies can bring your supply chain to a halt, as it did for a healthcare organization we worked with a few years ago who’s service levels to its customers dropped below 80% due to: (i) little training for their system administrators, (ii) decentralization of critical audit and control functions, (iii) bringing their system on-line too quickly and (iii) not understanding the compounding effects of their decisions on their MMIS system’s logic and interactions.

Back to Basics à Forward to Savings

Beyond the challenge of having the smooth flow of error free information within your MMIS, there are two basic areas that need immediate attention at 50% of our nation’s healthcare systems today to improve the quality of their data: (i) uniform pricing system-wide and (ii) developing a common language (or standard) to describe your data elements (vendors, manufacturers, commodity groups, products, product numbers, descriptions, unit of measure, unit of purchase, etc) in your MMIS systems, that is holding back great leaps forward in savings.   Some examples of what I’m talking about are: 

ü      Uniform pricing 

o       50% of the assessments that HCP has performed this year for hospital systems clients have one thing in common; their prices are different for hundreds, sometimes thousands, of the same products they are buying annually from the same manufacturers and vendors. This anomaly is due to a lack of policies, procedures and controls in a healthcare organization’s pricing maintenance function.  This challenge can be quickly fixed once a hospital or system realizes that it has this problem. And 50% of them do!

ü      Standardize Nomenclature 

o       It’s been said that “winners don’t take shortcuts”, neither should healthcare systems when it comes to designing and structuring the data elements in their MMIS systems if they want to data mine for savings opportunities over time. The most egregious shortcuts that we have found to date are: 

(i)               Combining descriptive data with numerical data

(ii)            Abbreviating vendor, manufacturer or product names and

      descriptions beyond recognition

(iii)          Missing data fields (manufacturers, Mfg. product numbers, etc.)

(iv)          Unintelligible or non-existent commodity categories

(v)             Commodity categories too broad or to narrow to be meaningful

By taking these shortcuts or due to a lack of controls, healthcare organizations impede or make it nearly impossible to data mine for price, standardization, utilization or contract savings in their data warehouses.

Data Quality Begins and Ends with Human Intelligence

Computer code and overly feature rich software accounts for a lot of the snafus with MMIS systems in healthcare today, but it’s human intelligence that insures the quality of the data that is entered into and generated by MMIS systems.  The most successful MMIS implementations that we have seen have exceptional data quality due to the careful and diligent planning, structuring, input and maintenance of data elements, thus, enabling these hospitals and systems to have a clear picture of what, when, who, how and for what purpose their dollars are spent.  Remember, for exceptional data quality, “Winners Don’t Take Shortcuts”.

 Copyright © 2002 The HCP Group, Ltd.

Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply/Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Supply/Value Chain”.