Medical group pushes standards for online buying

A group of health-care purchasing co-ops is teaming with three e-commerce companies to develop needed standards for buying medical supplies online.

2 min read
A group of health-care purchasing co-ops said today they are teaming with three e-commerce companies to develop needed standards for buying supplies online.

The consortium of health-care companies, dubbed the E-Standards Work Group, represents more than two-thirds of the nation's hospitals. The group wants manufacturers and distributors of medical supplies to start using standard product codes to ease the buying of supplies over the Internet, the companies said in a statement.

Health-care supply purchasers Consorta, HealthTrust Purchasing Group, Novation and Premier Purchasing Partners are joining e-commerce companies EmpactHealth.com, Medibuy.com and NeoForma.com to promote the use of online data-exchange standards.

The partnership will also reinforce and endorse product codes, such as Universal Product Numbers and Health Identification Numbers, and encourage other health-care industry players to participate in the e-commerce standards work group.

Despite the growing interest of companies to jump on the business-to-business train, analysts have long pointed to issues of security and the need for industry standards as serious obstacles to getting any business-to-business operation up and running. Today's move is an effort by health-care companies to jump the standards hurdle, analysts said.

"This is an important issue for all industries," said Laurie Orlove, an analyst at Forrester Research. "Companies either have to build similar consortiums and develop industry standards or find an intermediary company that will take their data and turn it into a standard format.

"It's very important for any industry to develop standards or have an intermediary to make the online buying and selling process less labor intensive."

Health-care analysts said the need to standardize is real. Some numbering codes already exist in the $80 billion-plus market. But scarcely more than 40 percent of medical and surgical supplies carry these unique identifiers today.

"The value of e-commerce is making efficient operations," said Eric Brown, a health-care e-commerce analyst at Forrester Research. "This is a value for both buyers and sellers. But in order to build these efficiencies, we need to develop standards."

Similar standards have been developed in the pharmaceutical industry under pressure from the Food and Drug Administration, which regulates that industry, Brown said. "The health-care industry needs standards and has enjoyed a little of this on the drug purchasing side."

Unlike the pharmaceutical industry, the medical-supply industry has relatively few standards. The absence of standard nomenclature for even the most prosaic items, such as bandages, prevents comparison shopping and cost-effective purchasing, analysts said. The advent of electronic-purchasing exchanges makes the problem more acute.

Collectively, the E-Standards Work Group manages more than $30 billion worth of purchases annually for the nation's hospitals.

By the fall, the consortium will propose a common product classification system and categorization for identifying all medical-surgical products bought and sold over their systems, the companies said.

Subsequently, the group will work on standards for all other non-pharmaceutical products that health-care providers purchase over the Web. The group wants to accomplish this by the end of the year.