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Creating an efficient healthcare supply chain

Transforming the supply chain at Leeds Teaching Hospitals NHS Trust has lowered operational costs, provided visibility into processes and inventory, and increased capacity for better patient care
Leeds Teaching Hospitals NHS Trust
Leeds, UK
Leeds needed to increase its capacity to improve patient care, while reducing operational costs and future-proofing its supply chain, including establishing a better understanding of what stock it had on site, where it was stored and when it would expire.
In the UK, as in the rest of Europe, the healthcare supply chain is a significant labour and cost burden to hospitals and healthcare manufacturers alike because of widespread manual processes, discrepant data and disjointed systems. A Department of Health report illustrated that around 10% of National Health Service (NHS) inpatient episodes result in errors of some kind – of which 50% are preventable. Of eight million admissions each year, approximately 850,000 result in patient safety incidents that cost the NHS £2billion (€2.5 billion) in extra hospital days. And the impact of this extends to patient care. A 2010 survey conducted by Nursing Standard and GS1 UK found NHS nurses spent an average of 2.3 days each year searching for missing hospital equipment, which equates to £1 billion (€1.25 billion) in salary costs. 
Leeds, like many other healthcare providers in Europe, had suffered the consequences, incurring higher staff costs because of inefficient manual processes, losing revenue due to damaged and expired inventory and having to store more products than necessary. The organisation embarked on a supply chain transformation project with its e-business provider GHX to reduce operational costs and supply chain inefficiencies, while increasing its capacity to improve patient care through a better understanding of what stock it had on site, where it was stored and expiry dates.
By partnering with GHX to deploy technologies and solutions for data and contract management and supply chain automation, and implementing GS1 data standards in collaboration with its suppliers, Leeds has streamlined processes and reduced waste while enhancing patient care, reducing invoice/purchase order match discrepancies by 45% and decreasing inventory levels by 39% for savings of £500,000 (€625,000).
To achieve its goals, Leeds took a holistic and collaborative approach. “Providers tend to concentrate on price paid for products, as opposed to total supply chain costs, which include labour costs, inventory management, and purchasing/accounts payable administration,” said Graham Medwell, Information Manager at the Supplies Department. “As a result, the traditional buyer/seller relationship can become confrontational. In order for our initiative to work, we had to change the nature of the relationship with our suppliers by sharing data and collaborating on process improvements that can result in costs savings all around.”

Process automation
Leeds was an early adopter of the GHX e-commerce Exchange, which provides a single electronic data interchange (EDI) connection to its major suppliers. By transacting accurate, synchronised data with its suppliers through the GHX Exchange, Leeds has automated previously manual procurement processes to gain efficiencies, improve accuracy and reduce costs. Leeds is now able to monitor transactions placed in real-time and address any discrepancies before they reach Leeds’ financial systems.
“We see the orders going to various suppliers and can drill down to view the data, including the date and time when the supplier received our order,” said Medwell. “This gives us the confidence that orders have been received, unlike the old days of faxing when we had no way of knowing if an order was lost in transmission.” In order to achieve these benefits, Leeds requires that all suppliers with which it contracts be e-commerce compliant. 
Data sharing
To facilitate sharing of accurate and standardised product data between Leeds and its suppliers, Leeds adopted GHX Nexus – a catalogue management system. The solution operates on the principle of content partnership; sharing the burden of maintaining accurate product information between a hospital and its suppliers. GHX features a cloud-based data repository with secured shared access for both Leeds and its suppliers. This has increased the accuracy of the product information sourced at the start of the purchase to pay cycle and thereby lowered the number of invoice to purchase order-matching discrepancies by 45%.
Inventory management
Leeds has also taken control of its orthopaedic consignment inventory by integrating GHX systems for catalogue, contract and inventory management into the Trust’s financial, operating room  (OR) management and patient administration systems. Through this fully automated and integrated system, Leeds has cut £500,000 (€625,000) worth of stock from its inventory. By knowing what products are available, where they are stored and when they will expire, Leeds has eased the administrative burden on clinical staff and reduced waste.
Today, clinicians capture product usage in the OR by scanning barcodes on all products used during a procedure. These data are transmitted to its integrated systems (GHX, clinical and financial systems) to record product usage in patient records and facilitate electronic transactions (for example, orders, and invoices) through the GHX Exchange. Any unused products are documented and returned to inventory.
With supplier contracts in place and visible to all parties through GHX, the purchasing process is more accurate with Leeds paying the right price for the right products. Leeds’ suppliers have experienced labour and costs savings as well, with minimal labour required to manage consignment inventory and less waste from expired products. Capturing product data at the point of use also enables Leeds to record information on costs by procedure implant data for the National Joint Registry.
The supply chain equally impacts everyone, it presents a common ground for trading partners to come together to enact real change. Leeds is a prime example of why this approach works for healthcare. By engaging with suppliers through GHX to integrate systems, automate processes and share standardised data, Leeds and its suppliers have improved operations and reduced costs for themselves and each other while, at the same time, enhancing patient care.
“GHX is a superb body in that it already exists, so providers and suppliers don’t have to reinvent an infrastructure for collaboration,” said Medwell. “As an industry, we have the technology and the data standards to cut costs in the supply chain. Supply chain managers must now raise the bar, take advantage of the resources at hand and demonstrate to their leadership the significant savings that can be achieved through their work.”