Standards for product descriptions

From HMCwiki

Standards for product descriptions are critical to establish an organized supply chain management system that enables the understanding of how and where spending occurs; necessary for revealing current savings opportunities and financial projections. Often organizations have a limited number of digits (3 to 6) available for their supply accounts, requiring like items to be categorized rather than identified (eg. coronary stents are lumped with peripheral stents, urinary stents...etc.). This identification approach adds to supply chain costs in the administrative time required to bring transparency to the tracking and managing of purchased items.

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Creating a product classification method

Because healthcare lacks a standard for product descriptions and classifications it is difficult to determine the appropriate classification scheme. Also, questions can arise between clinical and financial staff about how specific items should be coded; leveraging UNSPSC, an open, global product taxonomy, is a way to circumvent these challenges.

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Example of enhanced bargaining power

Mike Brown, Director of Purchasing at the University Health Care System in Augusta, Georgia, used UNSPSC to negotiate a better stent supply contract. In order to strengthen UHCS's bargaining position, Brown and his team needed to know exactly how many stents were being used, and which models. UNSPSC provided an easy access to this data, and as a result, Brown was able to approach and review usage patterns with physicians and hospital administration in order to get these stakeholders on board. After which, Brown approached one of their suppliers with the same data ^[1]

"We absolutely enhanced our bargaining position, We approached our supplier, and reviewed our program with them. We had tracked a couple of months of data to show market share, and put together an achievable program that met the needs of both the hospital and the supplier. By agreeing to use this manufacturer's stents in a certain percentage of the procedures at the hospital, we got a 14% reduction in price. It's an agreement that is saving us $600,000 a year^[1]."

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