This document provides a summary of supply chain data standards in healthcare. It discusses the current lack of standards which causes inefficiencies and errors. The benefits of adopting common standards are outlined, such as improved patient safety, health efficiencies, and increased supply chain visibility. Leading organizations are encouraged to raise awareness, collaborate across the supply chain, and prepare for change to help turn health supply chain data standards into a reality industry-wide.

1. Supply Chain Data
Standards in Healthcare
by
Michael Zirkle
zirkle_michael@bah.com
Ryan Gallagher
gallagher_ryan_b@bah.com
Seth Rogier
rogier_seth@bah.com

2. Table of Contents
Making Healthcare Safer and More Efficient With Supply Chain Data Standards....................... 1
Health Standards Landscape .............................................................................................. 1
What Supply Chain Data Standards Look Like ....................................................................... 2
Benefits to the Healthcare Industry ..................................................................................... 2
Turning Health Supply Chain Data Standards Into a Reality .................................................... 3
Conclusion ........................................................................................................................ 3
Booz Allen Can Help You Be Ready for What’s Next ............................................................... 4
References......................................................................................................................... 4
About the Authors............................................................................................................... 5
About Booz Allen................................................................................................................. 6
Principal Offices.................................................................................................................. 7

3. Supply Chain Data Standards in Healthcare
For many healthcare organizations, the lack of a widely Health Standards Landscape
adopted supply chain data standard is causing inefficien- Health standards are not new, and the standards
cies and errors that are affecting both patient safety and landscape is becoming increasingly active as
the bottom line. information technology (IT) makes rapid data sharing
Making Healthcare Safer and More Efficient easier. Although the industry has several well-
With Supply Chain Data Standards documented and generally accepted standards for
Standards are a necessary component to efficiently medical terminology, classifications, observations,
communicate and exchange information. Common data transmission, and claims, there is no equivalently
languages, such as English or French, enable people accepted standard for identifying medical products
to talk to one another, and other types of standards within the supply chain. Existing product identification
are needed for computers and systems to exchange data standards promoted by groups, such as GS1
information. However, without standards, whether and the Health Industry Business Communication
in language or technology, conversations must Council (HIBCC), are common; however, none
be translated, data must be converted, and the have the industry-wide acceptance and adoption
opportunity for error increases. needed to foster seamless interoperability among
supply chain partners. Too often, medical product
This is certainly the case in the healthcare supply manufacturers, distributors, and providers have their
chain, where hundreds of thousands of different own unique way of identifying products supported
products are bought and sold, yet there is no single by proprietary identification numbers, barcodes, and
standard for the data identifying them. Instead, the siloed IT systems. When one considers the volume of
industry is hampered by multiple organizations with transactions, value of products being moved, and the
competing standards. Although supply chain partners implications of medical device identification errors, it
are exchanging data more than ever, they are still becomes evident that a problem that appears to be
struggling with the lack of widely adopted data specific to the supply chain is actually a much larger
standards, resulting in: issue that affects the entire healthcare industry.
• Data and transaction inefficiencies
• Errors when ordering and shipping products Health Standards
• Limited or inaccurate data capture on products used Beyond supply chain and identification data
• Difficulties tracking products in the event of a recall standards, such as GS1, HIBCC, and ISBT
128, there are many other standards in health-
• Costly overhead to build and maintain proprietary care. Current standards exist for messaging,
item masters or data sets such as Health Level 7 (HL7), vocabularies
• Negative impacts on patient care such as Systemized Nomenclature for Medicine
(SNOMED), codes such as International
To overcome these problems, healthcare organizations Classification of Diseases (ICD), and observa-
need to collectively strive for quality, accurate, and tion identifiers such as Logical Observations,
interoperable data that can be shared among supply Identifiers, Names, and Codes (LOINC).
chain partners using a common language, or standard.
1

4. What Supply Chain Data movement and information exchange; however, the
Standards Look Like efficiency and safety of this infrastructure is currently
Physical identifiers such as barcodes and radio hindered by low-quality or inaccurate data. With the
frequency identification (RFID) tags are used to adoption of a common supply chain data standard,
store and transmit product data captured in various healthcare organizations can begin improving this
information systems, ranging from automated medical infrastructure and realize value through:
supply cabinets to inventory and financial systems. Patient Safety:
Currently, these identifiers are not standardized on
medical products, leaving organizations with little • Improved traceability throughout the supply chain to
other choice than to create their own proprietary item facilitate the identification and removal of recalled or
identification data sets and item master catalogs. counterfeit products
Non-standard product identification data can lead to • Reduced human error by enabling automatic
a host of problems, ranging from inefficient or failed data capture and by reducing any ambiguity when
transactions (such as purchase orders) to potentially identifying products
harmful identification errors. Conversely, healthcare • Improved post-market surveillance through the
industry adoption of a data standard, exemplified by standardization of product information and clinical
the grocery industry and the now ubiquitous Universal attributes that can be compared and analyzed
Product Code (UPC), would enable healthcare organiza- across databases
tions to efficiently and safely identify products while
they move through the supply chain (see Exhibit 1). Health Efficiencies:
• Reduced information administration and manual
Benefits to the Healthcare Industry efforts associated with maintaining proprietary
The sheer number and complexity of health products product identifiers within internal IT systems and on
requires a robust infrastructure to support product physical barcodes
Exhibit 1 | What Supply Chain Standards Look Like
Non-standard Product Identification Data Standard Product Identification Data
Manufacturer
Provider Provider Manufacturer Distributor Manufacturer
Provider Distributor
ID: 789
123 ID: 789 ID: 123 ID: 123 ID: 123 ID: 123
istributor Distributor
ID: 456 ID: 456
Translation
Translation Translation Transaction Transaction
Currently, non-standardized medical product identification information A standard identifier used among supply chain partners (such as the
causes confusion, errors, and waste throughout the supply chain UPC on grocery products) could help the healthcare industry streamline
because many organizations use their own proprietary data to identify operations, enhance product traceability, and ultimately promote patient
products while translating information provided by others. safety by reducing identification errors.
Source: Booz Allen Hamilton
2

5. • Streamlined inventory management by reducing
process errors and redundancies and providing a “Industry leaders in improving the healthcare
foundation for organizations, functions, and systems value chain are the same early adopters of
to share information GS1 standards. Early adoption may become a
• Increased visibility into the supply chain and competitive advantage in managing data across
improved decision support with consistent and the value chain.”2
accurate data that can be compared, aggregated, —Gartner, June 2011
and analyzed
• Proactive staff who spend less time trying to
obtain and cleanse data and more time analyzing • Raise Awareness. The health supply chain is
information to make decisions composed of a wide array of stakeholders who
may benefit from the adoption of standards. To
Turning Health Supply Chain raise awareness and encourage support, supply
Data Standards Into a Reality chain leaders should communicate the benefits of
Supply chain data standards can make healthcare standards and establish cross-functional teams to
safer and more efficient, but only if industry partners ensure all aspects of the organization support and
are willing to adopt them. A number of factors, are prepared for standards adoption.
including mounting economic pressures, pending • Collaborate Across the Supply Chain. The benefits
federal and state regulation, and an industry push for of data standards will accumulate as more
proven standards, are converging to accelerate these organizations adopt them and supply chain partners
cooperative efforts. can begin exchanging information seamlessly. To
As these factors develop, leading organizations are maximize these benefits, organizations should
getting ahead of the curve by championing industry- proactively work with their partners (e.g., vendors,
wide adoption of data standards and preparing their group purchasing organizations (GPO), etc.) to raise
supply chains. To turn data standards into a reality, external awareness and establish adoption goals.
health organizations and supply chain leaders can • Prepare for Change. Understanding the
advocate for standards through a few key activities: technological, operational, and clinical implications
• Engage Industry Trends. Organizations looking of standards is critical for setting expectations,
to adopt supply chain data standards should planning for change, and achieving successful
stay prepared by actively engaging in the industry execution. Conducting an assessment of these
and regulatory trends around them. Leading areas will help organizations define the scope of the
organizations and industry groups, such as Mayo effort and understand their level of preparedness.
Clinic, GS1 Healthcare US, and the Healthcare
Transformation Group, regularly publish case Conclusion
studies and newsletters and hold standards-related As US healthcare expenditures continue to grow,
events. In addition, pending regulations, including reaching an estimated $6 trillion by 2020,3 the need
the Federal Drug Administration’s Unique Device for an efficient and safe healthcare supply chain to
Identification1 (UDI) and various state electronic help bend the growing healthcare cost curve is now
pedigree requirements, will undoubtedly affect the greater than ever. To turn standards into a healthcare
way data is managed in the supply chain and should reality, now is the time for all healthcare stakeholders
be monitored. to follow the steps of leading organizations and begin
preparing their supply chains for standards adoption.
3

6. Booz Allen Can Help You References
Be Ready for What’s Next 1. US Food and Drug Administration,
Booz Allen is a trusted partner of clients in the http://www.fda.gov/MedicalDevices/
healthcare industry and is dedicated to tackling their DeviceRegulationandGuidance/
toughest challenges and delivering results that endure. UniqueDeviceIdentification.
We deliver broad expertise in the full spectrum of
2. Gartner, GS1 Standards Gain Traction Toward
health, supply chain, business, and technology to
Improving Healthcare and Life Science Supply
help clients take on the complex challenges of the
Chains; June 29, 2011.
21st century. Booz Allen has a team of experts with
a proven record of success in all aspects of 3. Centers for Medicare & Medicaid Services,
healthcare consulting: https://www.cms.gov/NationalHealthExpendData/
downloads/proj2010.pdf.
• Health Analysts—providing subject matter experts
and years of experience in health operations,
systems, and architecture
• Supply Chain Professionals—offering experienced
professionals in health sourcing, contracting,
operations, and supply chain technologies
• Standards Experts—providing broad perspective
and expertise on the life cycle of standards and
their integration across organizations, processes,
and systems
4

7. About the Authors
Mike Zirkle is a Principal at Booz Allen Hamilton Seth Rogier is an Associate in at Allen and a
and a member of the firm’s Analytics professional member of the firm’s Analytics professional staff.
staff. Focused on the civil market, Mr. Zirkle has He has nearly 10 years of experience in supply
nearly 20 years of experience with supply chain chain and operations and maintains a focus in the
and operational improvement in both the public and health market.
private sectors.
Ryan Gallagher is a Senior Associate at Booz Allen
and a member of the firm’s Analytics professional
staff. He has more than 15 years of management
consulting experience. Mr. Gallagher leads Booz
Allen’s Strategic Sourcing and Supply Chain Strategy
offerings and is focused on the health market.
Contact Information:
Michael Zirkle Ryan Gallagher Seth Rogier
Principal Senior Associate Associate
zirkle_michael@bah.com gallagher_ryan_b@bah.com rogier_seth@bah.com
703-377-0029 202-346-9020 217-493-3635
5

8. About Booz Allen
Booz Allen Hamilton has been at the forefront of deliver enduring results. By combining a consultant’s
strategy and technology consulting for nearly a century. problem-solving orientation with deep technical knowl-
Today, Booz Allen is a leading provider of management edge and strong execution, Booz Allen helps clients
and technology consulting services to the US govern- achieve success in their most critical missions—as
ment in defense, intelligence, and civil markets, and evidenced by the firm’s many client relationships that
to major corporations, institutions, and not-for-profit span decades. Booz Allen helps shape thinking and
organizations. In the commercial sector, the firm prepare for future developments in areas of national
focuses on leveraging its existing expertise for clients importance, including cybersecurity, homeland security,
in the financial services, healthcare, and energy mar- healthcare, and information technology.
kets, and to international clients in the Middle East.
Booz Allen is headquartered in McLean, Virginia,
Booz Allen offers clients deep functional knowledge
employs more than 25,000 people, and had revenue
spanning strategy and organization, engineering and
of $5.59 billion for the 12 months ended March 31,
operations, technology, and analytics—which it com-
2011. Fortune has named Booz Allen one of its “100
bines with specialized expertise in clients’ mission and
Best Companies to Work For” for seven consecutive
domain areas to help solve their toughest problems.
years. Working Mother has ranked the firm among its
The firm’s management consulting heritage is the “100 Best Companies for Working Mothers” annually
basis for its unique collaborative culture and operating since 1999. More information is available at
model, enabling Booz Allen to anticipate needs and www.boozallen.com. (NYSE: BAH)
opportunities, rapidly deploy talent and resources, and
To learn more about the firm and to download digital versions of this article and other Booz Allen Hamilton
publications, visit www.boozallen.com.
6

9. Principal Offices
Huntsville, Alabama Indianapolis, Indiana Philadelphia, Pennsylvania
Sierra Vista, Arizona Leavenworth, Kansas Charleston, South Carolina
Los Angeles, California Aberdeen, Maryland Houston, Texas
San Diego, California Annapolis Junction, Maryland San Antonio, Texas
San Francisco, California Hanover, Maryland Abu Dhabi, United Arab Emirates
Colorado Springs, Colorado Lexington Park, Maryland Alexandria, Virginia
Denver, Colorado Linthicum, Maryland Arlington, Virginia
District of Columbia Rockville, Maryland Chantilly, Virginia
Orlando, Florida Troy, Michigan Charlottesville, Virginia
Pensacola, Florida Kansas City, Missouri Falls Church, Virginia
Sarasota, Florida Omaha, Nebraska Herndon, Virginia
Tampa, Florida Red Bank, New Jersey McLean, Virginia
Atlanta, Georgia New York, New York Norfolk, Virginia
Honolulu, Hawaii Rome, New York Stafford, Virginia
O’Fallon, Illinois Dayton, Ohio Seattle, Washington
The most complete, recent list of offices and their addresses and telephone numbers can be found on www.boozallen.com.
www.boozallen.com ©2012 Booz Allen Hamilton Inc.
12.129.11