Facing the music

March 20, 2014

In 2007, I was asked to serve as a lead facilitator at The Global Forum at Canadian Music Week, an invitation-only event designed to explore the current and future landscape of the international music industry. 

At the time, music executives felt powerless to act as the reach of the Internet, the mp3 and digital piracy were growing at seemingly exponential rates. Within this hostile environment, they were treading water in a tsunami of new data. They had no idea how to survive the crushing wave of information. The idea of having your wits and resources directed at studying the situation with the hopes of developing a predictive tool for future best practices seemed impossible. 

Does this sound familiar to anyone in healthcare?

A month or so after Canadian Music Week, I shared an elevator with Ray Cooper, former President of Virgin Records. He had worked at a separate discussion table for the conference, and I asked him about his impressions of the event.

“They just don’t get it, Jason,” he said. 

A bell rang, and the doors opened. 

“It isn’t technology that dictates our future,” he said as he exited. 

I remained in the elevator to continue the ride to the lobby. He turned back to speak to me with his hand holding the door.

“It’s the supply chain,” he said in a tone as if he were stating the punch line to a joke. “No matter what comes your way, respect what the supply chain has to say, and you’ll be fine. We haven’t done that for a while now, and we are paying the price for it.”

Before I could ask him to elaborate, a woman politely tapped Cooper’s shoulder, hoping to enter the elevator. He held the door just long enough for her to enter, and we quickly agreed to speak again just before the doors closed and my ride continued.

Fast forward to the HIMSS14 preconference symposium entitled, “Linking Technology and Supply Chain: Cost, Quality and Outcomes,” where the speakers and attendees discussed how the supply chain data can help healthcare organizations give higher quality care at lower costs. They were very passionate about moving directly forward into the numerous, eminent sea changes facing the industry. (They were so passionate that most of the symposium attendees met again for a 7 am breakfast two days later for another round of dialogue and debate). One major point of discussion involved unique device identification (UDI).  

As part of the Food and Drug Administration (FDA) Act of 2007, the UDI system requires a unique identifier for medical devices in the United States. Under this rule, medical devices will be required to have certain information clearly listed on their labels and packaging. Some of the information required includes the device’s manufacturer and model, production lot number, serial number, expiration data and date of manufacture. In addition to new label and packaging requirements, the FDA also called for the creation of the Global Unique Device Identification Database (GUDID) that will contain a standard set of basic identifying elements for each device with a UDI. 

The basic intent of this rule, along with additional rules such as the FDA Safety and Innovation Act of 2012, is to reduce obstacles to the identification of medical devices used in the United States. The system is also aimed at reducing medical errors, simplifying device information in data systems, hastening reports relative to adverse events and facilitating communication with the FDA, Centers of Disease Control and Prevention (CDC), Centers for Medicare & Medicaid Service (CMS) and other industry organizations. 

On Sept. 24, 2013, the FDA issued its UDI System Final Rule that outlines key compliance dates. The labels and packages of implantable, life-supporting and life-sustaining devices must bear a UDI no later than Sept. 24, 2015. Other medical devices have subsequent compliance dates based upon their FDA classification. All medical devices, regardless of classification, must bear a UDI no later than Sept. 24, 2020. 

With these new rules in place, the opportunity to gather, analyze, synthesize and share tremendous amounts of critical data is staggering. But who can effectively perform these tasks?

That’s right: the supply chain.

It all sounds simple and logical, however, after speaking with various members in the field, it’s obvious that, much like with the upcoming mandate relative to ICD-10, the healthcare industry is not ready for the full impacts of UDI/GUDID.  That’s not to say that most do not see the value in an organized effort to identify medical devices, or how such a system can cultivate new policies and practices at every level of the industry. The problem is that few can work past the silo mentality that dominates so many in healthcare, or countless other sectors for that matter. Many feel the results of their efforts to harness any new data while trying to implement the UDI/GUDID rules would be similar in nature to their attempts to push back the ocean with a broom.

Ray Cooper and I had many follow-up conversations about the power of the supply chain. From his perspective, when it comes to achieving collaboration and standardization within an industry, the supply should take the lead and everyone else should “keep their mouths shut until they can all speak the same language.” He saw the benefit of this philosophy during the 1980s when the International Electrotechnical Commission (IEC) adopted Compact Disc Digital Audio (CDDA) as the standard for all compact discs. 

Prior to the adoption of CDDA, the music industry was earning huge profits from their latest replacement for the vinyl record format: the cassette tape. When the compact disc first entered the market, the industry violently rejected it as being unnecessary, expensive and logistically problematic for its distribution, marketing and sales efforts. However, being well positioned within the industry, the supply chain was able to gather real, not perceived, new data needed to assist artists, distributors, promoters, administrators, store owners, press, etc. 

Unlike with cassettes, with the new CDDA audio and identification standards in place, the supply chain was more easily able to source and retrieve information at every location a compact disc “lived.” New insights were gained by tracking the compact disc within manufacturing plants, trucking routes, warehouses, sales floors, display cases, concert facilities, press kits, promotional giveaways, etc. The supply chain leveraged their findings to create new models of business within each of these areas, and not just for themselves, but for their working partners as well. Had it not been for the music business supply chain’s enormous influence over other areas of the industry, influence that was earned from over 40 years of constant interactions with most every constituent in the business, the compact disc would have gone the way of the LaserDisc of the 1970s. Instead, manufacturers, distributors, promoters, store owners, venue owners, sponsors, artists and executives incorporated the supply chain’s lessons into their own processes, and the industry went on to generate record profits for nearly 20 years. (It was not until the consumerization of the Internet and the entertainment executives’ failure to accept that the new digital formats required modifications to their practices, modifications that the supply chain recommended but were ignored, that the compact disc began to lose its power as a viable product.)   

I know, on the surface, my comparison of the music industry supply chain’s influence on the success of the compact disc with that of the healthcare supply chain and the mandated move toward UDI/GUDID may seem like a bit of a stretch in logic. But if you look deeper, the connections are rooted in the same basic principle: the backbone of any industry is its supply chain. 

To prove my point, let’s examine some of the impacts UDI/GUDID is meant to achieve relative to how medical devices are to be handled in the future.

In terms of post-market surveillance, UDI/GUDID will provide a standard for data entry into clinical registries which, in turn, will provide better, more complete information needed during adverse event reporting. On a similar note, it will establish standard device identifiers in data sets used for research. It will also serve as a means to link data on medical devices between FDA data systems. 

The new data opportunities in this stage of life for a medical device are important to consider, but they are in a poor position to be used to make comprehensive evaluations and recommendations for other parts of the industry. That’s not to say that post-market surveillance issues do not impact clinical care or the supply chain, it’s just that they are limited in their capacity to develop far-reaching improvements outside their own sphere of operations. 

GUDID attributes mapped to a fictitious medical device label.

In terms of clinical care, UDI/GUDID will create standards to facilitate medical device use at the point of care, such as at a patient’s bedside, in an operating room or catheterization laboratory. It will create a standard to document medical devices used on, or implanted in, a patient and, in turn, it will facilitate recalls. 

The new data generated from tracking UDIs in this area will undoubtedly impact the quality of care and health costs in positive manners. It should also improve post-market surveillance and supply chain practices. However, given the heterogonous nature of healthcare organizations, it will be very difficult to create new, uniform practices that will be used throughout the entire industry, thus showing the clinical care arena’s limitations when compared to the supply chain’s countless physical and virtual positions within the market. This sort of blanket coverage is what is needed for the instantaneous local, regional and national presence that is vital in terms of effectively tracking and harnessing the benefits of UDI. The supply chain not only possesses the relationships required to leverage these positions, it has the historic knowledge needed to make comprehensive operating recommendations and decisions based upon the widest array of facts from the largest footprint in the industry.  

It is without question that the UDI/GUDID rule will find the most traction, and develop more comprehensive best practices, within the supply chain. It will help to eliminate inefficiencies and errors in procurement processes, establish integration between internal and external supply chains, lead to efficiencies and error reductions at points of care, create more focused item master lists and more precise contracts, purchase orders, invoices, etc. The industry will see greater accuracy in supply chain processes, reduced workarounds, cost savings, enhanced vendor relationships, improved recall times and more clean data that is necessary for future initiatives. 

The necessary steps that must take place in order to actualize these objectives involve the supply chain sharing the knowledge it gains internally and externally with other areas of healthcare. More importantly, the other areas of healthcare must listen to what the supply chain has to say, and I am afraid that is not going to happen as soon as it should. 

As I listened to the speakers and attendees at the supply chain meetings at HIMSS14, I could not help but think of Cooper’s comments, and then about the position the supply chain could play in the upcoming UDI initiatives and how other areas of the industry would benefit. As an observer, it confounds me that the healthcare industry has yet to “see the forest for the trees” on this issue.  

The Global Forum was too little, too late for the music industry. UDI/GUDID has not yet gained the momentum to be unwieldy in terms of capturing and analyzing the data it is set to generate. The time is now for members of the supply chain, and those who work with the analytics it generates, to begin sharing their knowledge and relationships so that important opportunities to create new best practices and to improve patient care at a more affordable cost are not wasted. After observing the representatives of the supply chain at HIMSS14, I do not see them remaining quiet. The real and troubling uncertainty I have is whether or not the rest of the industry will take the time to listen to what they have to say. 

This feature calls for the healthcare industry supply chain to take the lead during the development of the UDI/GUDID initiatives. Additional general information regarding UDI/GUDID will be posted on the HMT website within the “Online Only Features” section.

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