Group Purchasing Organizations (GPOs) and Integrated Delivery Networks (IDNs) were created with the specific purpose of reducing operating costs for healthcare facilities by enabling them to negotiating purchasing prices more effectively. But consolidation of GPOs and IDNs across the healthcare industry is leading to changes in how suppliers work with these organizations.
The volume of membership data that has to be processed by pharmaceuticals and BioTech companies has exploded in recent years. Ninety percent of hospitals in the US work with national GPOs, with an average tenure of 11 years as members. Hospitals route the majority of their product purchases (56 percent) through their primary GPO, and 88 percent of hospitals agree or strongly agree that their GPO generates savings from lower prices, according to a survey by Becker’s Hospital Review published in 2017.
The four largest GPOs, Vizient whose annual spend is $100 billion, Premier, annual spend $50 billion, Healthtrust, annual spend $30 billion, and Intalere, annual spend $9 billion, service close to 400,000 members, according to the survey. Adding to that members of wholesaler and distributor channels, and the amount of roster data that companies must manage becomes a formidable challenge.
|Member Net Patient|
|HCA Healthcare||205||$35,497||System II|
|Universal Health Services||176||$8,337||System II|
|Catholic Health Initiatives||153||$16,022||System IV|
|Community Health Systems||133||$12,885||System II|
|Ascension Health||132||$17,662||System IV|
|Select Medical Corporation||110||$1,982||System II|
|Tenet Healthcare||90||$14,228||System III|
|Kindred Healthcare||84||$2,213||System II|
|Trinity Health||74||$16,516||System IV|
This challenge is exacerbated by the variable quality of roster membership data. Making use of unique identifiers, with wildly varying formats, duplications, and errors, managing this data also means structuring it for efficient use. At the same time, compliance issues must also be addressed in the price reporting process.
Outsourcing roster data management provides an efficient solution
Meanwhile IT Departments at both large and small pharmaceuticals companies are occupied with other priorities, like establishing data analytics. With resources relatively scarce, asking them to provide time for cleaning, structuring and managing IDN and GPO roster data would pose additional responsibilities and costs that many are not prepared to undertake.
Even with the best will to address these issues, in-house IT at pharmaceuticals companies are probably not ready to provide solutions to these issues. They require expertise in areas most companies do not maintain internally. This includes assessing whether there are major data gaps, missing fields, inaccurate numbers, or information that isn’t in the right format and much more. Once those issues are addressed, the data must be compared with third-party data (available in various forms) for validation. Each aspect of the pharmaceuticals company’s trade class policies and definitions for assignment must be aligned.
Once the data has been structured, it must be reviewed for duplications and errors. This is done by comparing HIN and DEA numbers. A DEA Registration Number is an identifier assigned to a health care provider (such as a physician, optometrist, dentist, or veterinarian) by the United States Drug Enforcement Administration allowing them to write prescriptions for controlled substances. The Health Industry Number is a unique ID for identifying all healthcare trading partners — it was created by the industry as a universal identifier of all partners in the supply chain.
This system should have avoided confusions, but instead sometimes increases it. Wholesalers, payers, and manufacturers all might be using HIN and DEA account identifiers
differently for sales, chargeback, and rebate data. “Cross-walking” this data to third-party files for verification is, again, time-consuming and expensive.
Further validation is still necessary. Every pharmaceuticals producer has unique rules for determining which GPOs and IDN’s fit its roster.
Modification of the data in real time should be possible, although this can involve a deep dive into manufacturer rules for acceptance and
the relevant characteristics of the GPOs and IDNs. This involves a lot of know-how that manufacturers may not have accessible in their IT Departments.
The Third-Party Advantage – A Comprehensive Data management strategy
As pharmaceuticals firms outsource their GPO and IDN roster management, they can obtain a direct and significant increase to profit from these operations. Accurate data translates directly into return on investment, because so much time is saved from unprofitable use of the data.
Further, a specialist in this area can add value with data enrichment, making the data more robust and useful. Outsourcing offers cutting-edge data cleaning and processing applications that enable rapid changes to the roster data set. Because the third-party providers employ specialized and proprietary know-how, they can provide these services at a much lower cost than any IT Department.
In addition to that, third party service providers can help pharmaceutical companies to adapt their IT to this kind of new solution. Many pharmaceuticals companies do not have this kind of expertise in-house. For example, contracting applications are complex and often beyond the scope of in-house IT.
Contracting involves the whole range of industry stakeholders, and there are many in the pharmaceuticals value chain. Managing contracting also involves a slew of different systems and processes. To manage all this, an outsourcing provider can bring skills and technology to the table that in house IT Departments badly need.
To manage operations of this large scope, the most applicable system design and implementation are required. The third party service providers can assist in documenting requirements, configurations, customization, etc. as well as working with developers to assure the outcomes. With these skills, third party service providers can also help to adjust strategic objectives.
The pharmaceuticals supply chain is complex environment with many established processes and procedures. Fixing objectives based on clearly quantified impacts is not easy, and the outsourcing provider can help thanks to its long experience and specialized skill set, providing reliable quantified statements of impact which can be used confidently to make strategic decisions.
Given all the changes that the US healthcare value chain is undergoing, a third party service provider can help with every aspect of data management, offering considerable savings and greater efficiencies to pharmaceutical companies.
PointData, an third party service provider with years of experience, managing aggregation and structuring of roster data for pharmaceuticals manufacturers. Point Data was founded by a team of seasoned IT professionals, all with years of experience in the healthcare industry. We believe the roster management processes and rebate processes for pharmaceuticals/biotech firms is in dire need of an update. As a result, our focus is on helping organizations to make their entire contracting process more efficient and to drive down the cost of services, freeing up resources to focus on activities that add greater value. Today, PointData is improving efficiency in the healthcare industry by offering
them our Data-as-a-Service platform and providing consulting services to integrate cutting-edge solutions.