Electronic Procurement for Implants: Let's Do This!

Ask any healthcare buyer for their top list of problematic purchase orders, and you will hear the term “bill only” among the top 5. For years, these important implant orders have been mired in a soup of manual processing, paper-based processes, and inefficiencies. Unsurprisingly, the process results have been less than ideal. Price misalignments have delayed payments. Confusion over owned vs. consigned vs. “trunk stock” inventory has left providers unable to state their inventory levels with confidence. For years, we have simply thrown more people and manual processes at this problem, hoping that the high cost and margin on these implants will continue to pay for the outdated methods we are using.

Five years ago, Froedtert started on a journey to overhaul our method of procurement and to “digitize” what had long been a paper process. We have now reached a turning point as an industry: this process can be done with widely available tools. This brief article will serve a primer on how we did it, mention a few roadblocks, and finally call our industry to action.

Most healthcare provider organizations have been unable to automate bill only orders because of the many parties that own a small piece of the puzzle. Therefore, in 2017, Froedtert began at the point of order entry. Historically, our OR staff had scanned or faxed a copy of the sales reps “sticker sheet” or invoice to our purchasing team. Working with the OR, we agreed on specific requirements for each purchase order line. With specifications in place, we trained them how to use the system to electronically send requisitions; the same process that we use for all other supply orders.

Second, our buyers identified multiple problems: some purchase orders had bill only lines, and bill and replace lines on the same order. The buyers were frequently asked to send the purchase orders manually through fax or email to different recipients or local sales reps, rather than to our normal vendor contacts. In one case, this caused us to prevent any purchase orders from sending via EDI. As we dug into the issue, the buyers noted that because of our manual processes almost every corresponding invoice line had to be manually touched or corrected to get the invoice to file appropriately. In the end, the buyers could not change much of their processing until systems aligned.

Third, we worked with our ERP & e-procurement systems to ensure they were ready to process implant orders electronically. This required deep partnership and development of several enhancements to systems. Interestingly, none of these enhancements were revolutionary. For the most part, the core structure of the application already supported the process. For example, the standard PO format for EDI (850) already supports fields for exchanging information about consignment & trunk stock ordering. Small tweaks were needed to ensure that the right information flowed from the ERP through EDI and that all systems agreed on the definition.

Finally, we reached out to the vendors through our local sales reps, our national account reps, and any technical contacts that we had. Forward thinking partners worked closely with us to redefine their internal processes for receiving and managing these purchase orders. Each partner helped us identify internal resistance at their companies and helped to break through these issues. The most common resistance came from two places: first, the local offices wanted to ensure a high touch & high-performance customer service experience. By losing local control of the PO processing, local reps were reasonably concerned that they would lose certain benefits such as expedited delivery. The second source of friction involved the data teams. Each vendor wanted a slightly different set of information. One wanted Lot & Serial number. Another wanted Expiration date, patient initials, and case ID. Others wanted MRN, procedure name, or physician name. As we have collaborated with our vendor partners, we have settled on a standard set of options:

1. “Bill” code: in other words, bill only or bill & replace

2. Generic Part Information: vendor part number, UOM, and/or GTIN

3. Specific Part Information: Lot Number and/or Serial Number

4. Common identifier: Sales Order Number and/or Case ID

The results speak for themselves. With one vendor, we moved from 5 percent overall EDI ordering to 95 percent in just two months. With another vendor, we reduced “days to match” by XYZ percent. A third vendor moved from errors on every invoice to an auto-match rate well above 90 percent. Overall, we have automated an additional (X percent of spend or X percent of lines).

In the future, we hope that more vendors and providers will join us in bill only automation. The ground work is set up. Major ERPs, e-procurement platforms, and vendors are all capable of managing this process with no further enhancement. Automating these orders will greatly improve the digitalization of the entire P2P process.