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DoD and VA to Reduce Healthcare Supply Chain Costs

FORT BELVOIR, Va., Oct. 22 /PRNewswire-USNewswire/ -- With health facilities across the country struggling to make ends meet, the Departments of Defense and Veterans Affairs (VA) are demonstrating leadership by collaborating in efforts to reduce unnecessary costs and improve operations in the federal healthcare supply chain. Through the innovative joint incentive funding, the DoD and VA are linking and expanding their ongoing initiatives to both standardize and synchronize product information between their hospitals and supplier partners.

The DoD and VA joint incentive funding program is important because it takes aim at a significant problem in healthcare -- inconsistent and inaccurate product information. Bad data contributes to the inefficient exchange of information in the supply chain, adding costs to an already burdened industry and potentially impacting patient safety.

"Our ongoing effort to reduce costs through synchronized data holds promise for the entire industry. While we are seeing exciting results, our work really serves as an interim step that will help us drive efficiencies internally until a larger, industry-wide solution becomes a single, updated source for standardized and synchronized medical and surgical product information," says Kathleen Garvin, program manager for DoD/VA Data Synchronization. "Such an industry product data utility has the potential to bring the same level of efficiencies to the healthcare supply chain that data synchronization has brought to many other multi-billion dollar industries, including the grocery and retail industries."

To support the data synchronization program, the DoD is successfully synchronizing data housed in the materials information systems of 35 military hospitals with product data from more than 20 supplier partners and two major distributors. As of Sept. 15, 2007, the DoD has documented $16.5 million in product price reductions, and moved $6.7 million in 1,041 purchase order line items to e-commerce. Newer to the effort, the VA has 20 hospitals participating with more pending over the next 90 days. The hospitals are using custom software to pull product, purchasing and contracting data from a robust, authoritative and synchronized data source known as the Product Data Bank. This allows users to quickly identify and research opportunities to reduce costs, particularly in areas where hospitals may be able to leverage existing supply contracts that offer better pricing than what they may have been paying previously.

"Accurate product information is key to improving efficiencies in the Medical Supply Chain, synchronizing critical medical data across the continuum of care, from medic to the medical center," says Colonel Marsha Langlois, director of the Medical Customer Operations Directorate at the Defense Supply Center Philadelphia. "Standardizing product data reduces healthcare costs, and most importantly, expedites delivery of the right items to our war fighters."

Improving healthcare supply chain data not only improves supply chain processes and transactions, it ensures that clinicians have the right supplies to provide quality patient care, according to Fred Downs, chief officer, Prosthetics and Clinical Logistics, Office for Veterans Health Administration. "It is more critical than ever that VA and DoD clinicians have the supplies they need when they need them, to ensure their patients' health and well-being." Downs adds that he hopes to have every VA hospital participating in the joint data synchronization program, for a minimum of $10 million in savings identified for VA hospitals in the next 18 months.

Hospitals participating in the program are researching savings opportunities that can range from a few hundred dollars to hundreds of thousands of dollars a year on a single item. Most opportunities are ones that hospitals can easily implement.

"Individual success stories can add up quickly to millions of dollars in potential savings when applied across the hundreds of DoD and VA hospitals," says Dana Baker, director of Army Medical Logistics Systems Division, who initiated the development of a data sync software tool for the Army Surgeon General in 2003.

"The way the medical marketplace changes from day to day, we need ways to identify opportunities to get the best prices and sources for items we are buying," says Janet Hinkle, supervisor of Materiel Branch at Fort Carson, Colo. "There aren't enough hours in the day to identify these savings opportunities manually, so having the technology that sheds light on cost savings is extremely valuable."

The JIF program is producing tangible results, according to John Hinson, chief, Logistics Management Service at Veterans Health Administration's Northern California Healthcare System, Sacramento, Calif. "Key to our progress is the identification and application of key data elements that drive efficiencies in the supply chain. VA, DoD and our suppliers are using pre-defined criteria for the standardization of our data, and the databases that feed our systems are being synchronized to establish a common language for the products we use, paving the way for more insightful and accurate spending analyses based on individual items instead of commodities. Synchronized product data allows us to make decisive changes that could have an immediate impact on our bottom line," Hinson says.

Hinson adds that previous spending analysis generally revolved around commodity analysis with multiple classification schemes. He and his colleagues at VA are especially excited about what a foundation of synchronized data means for the future of the healthcare supply chain -- an accurate platform for the implementations of Radio Frequency Identification technologies and the electronic health record. "With synchronized data, the future is bright," Hinson says.

Improving the quality of patient care and eliminating unnecessary spending on such important, high-profile topics these days, the VA and DoD data synchronization partnership is an example of the federal healthcare community mobilizing around shared goals of reducing costs, increasing efficiencies and improving patient safety. These successes highlight the need for healthcare to adopt a wider product data utility solution that uses industry-accepted global data standards. Such a solution will offer benefits for the entire healthcare community, both commercial and federal.

Operating within the Defense Logistics Agency and the U.S. Department of Defense, Defense Supply Center Philadelphia annually buys $12.4 billion worth of food, clothing, textiles, medicines, medical equipment and construction and equipment supplies and services for America's warfighters, their eligible family members and other federal customers worldwide.

DLA provides supply support, and technical and logistics services to the U.S. military services and several federal civilian agencies. Headquartered at Fort Belvoir, Va., the agency is the one source for nearly every consumable item, whether for combat readiness, emergency preparedness or day-to-day operations inside the Department of Defense.

More information about DLA is available at

SOURCE Defense Logistics Agency
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