The state of standards adoption for contract price alignment
Periodically, I am asked what Global Healthcare Exchange (GHX) sees regarding usage of GS1 standards in the four most common supply chain transactions sent via electronic data interchange (EDI) across the exchange: purchase orders (850), purchase order confirmations (855), advanced ship notices (856) and electronic invoices (810). This data can help gauge adoption of the Global Trade Identification Number (GTIN) for product identification and the Global Location Number (GLN) for organization/location identification, but it only tells part of the story. There are many other opportunities to utilize the standards, including to improve contract price alignment, which remains a costly problem for all parties.
It’s been a year since the Healthcare Industry Distributor Association (HIDA) published its report Contract Communications Standards for the Healthcare Supply Chain that strongly encouraged use of GLNs in transactions used to manage contract price across multiple parties, including manufacturers, distributors, and healthcare providers. So I asked my colleagues at GHX to take a look at usage of standards in the following transaction sets:
1. For the medical device supply chain: Despite the growing market interest in GS1 standards, locations and organizations are still more commonly identified with the Health Industry Number (HIN) managed by the Health Industry Business Communications Council (HIBCC) than GLNs in contracting-related transactions, such as 845s and 832s. For 844s and 849s, there were no GLNs (only HINs) and neither the GS1 or HIBCC standards were used for product identification in those transaction sets. We are beginning to see some usage of GLNs and GTINs in 867s and 852s. In the 1990s, prior to GS1 entering the healthcare space, many manufacturers and distributors made considerable investments to move to HINs, and some are reluctant to move to GLNs without more adoption by providers who must take the first step to enumerate their locations with GLNs.
2. For the pharmaceutical supply chain: Pharmaceutical manufacturers and distributors are more advanced in terms of utilizing advanced transaction sets for contracting purposes. GLNs and GTINs are used in 845s, 832s, 867s and 852s, but the pharmaceutical industry still widely uses the HIN or the Drug Enforcement Administration (DEA) number for organizations/locations and the National Drug Code (NDC) for products. In fact, for 844 and 849s, the NDC is the only standard used for product identification for those transactions going across the GHX exchange. Both the DEA numbers and the NDC are U.S. specific identifiers. It will be interesting to see if use of the GS1-standard Electronic Product Code Information Services (EPCIS) to meet expanding drug traceability requirements in the U.S. and elsewhere results in greater usage of GLNs.
As for the perennial question re: the usage of GLNs and GTINs in four most common supply chain transactions (850s, 855s, 856s and 810s), the past year has been a mixed bag. Overall, the percentage of transactions with GTINs has gone up considerably, while use of GLNs has decreased slightly. At the same time, there was a decrease in suppliers using GTINs and in providers using GLNs. That could be the result of merger and acquisition activity or the need to stop using the identifiers, at least temporarily, due to technology implementations, e.g., an ERP upgrade. Providers are still limited in their use of GTINs in purchase orders, but suppliers are responding with the product identifiers in the other transactions. It is important to recognize that overall usage of the standards is still relatively limited. For GTINs, just under 10 percent of suppliers and only 2 percent of providers on the GHX exchange are using them in transactions; for GLNs, approximately 13 percent of suppliers and 4 percent of providers on the exchange are using the standards in the most common transaction sets.
GS1 Standard Adoption in Common Supply Chain Transactions
Karen Conway | CEO, Value Works
Karen Conway, CEO, ValueWorks
Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends. After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.
