Johnson automates health-care supply chain

LOUISVILLE  —  In an industry that uses technology advanced enough to replace a person’s hip, it’s a shock to realize that a good number of health-care organizations still rely on checks to pay their bills.

The problems with this outdated system include time-on-task expenses for personnel to stay on top of invoices and payments as well as human-error inaccuracies.  Without operational efficiency, the cost of doing business stays high, and opportunities to afford and increase services suffers.

To help health-care providers increase their focus on quality care, Global Healthcare Exchange (GHX) came on the scene in 2000 with supply chain management technology.  The cloud-based solution automates processes and cuts more than $1 billion from the cost of health-care delivery annually.

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It brings health-care providers, manufacturers, distributors and group purchasing organizations into a community by automating manual processes.  The result includes transparency in pricing and costs, increased efficiencies in procure-to-pay processes and comprehensive data to support buying decisions.

Bruce Johnson, president and CEO, has been in on the GHX mission since the beginning of the company.

“In 2000, automation was a fax machine, and people said they were automated when they had one,” he said, referring to the early days of GHX.  Hospitals used telephone calls and faxes to place orders with suppliers that were chosen from a paper catalogue, they mailed invoices and they paid by checks.

“In 2009, about 40 percent of electronic documents still had discrepancies and didn’t match what was originally sent and what was sent back.”  One of the causes was the incompatibility between programs that formatted the documents. 

The differences could cost hospitals thousands upon thousands of dollars.

In health care, 60 percent to 70 percent of invoices are still paid by check today, Johnson said. 

“If you compare the percentage of total budgets that the health-care industry has spent on IT, you’d see that it’s behind other businesses. Health care has been a cottage industry until the last 20 years.”

Since the field has started joining the ranks of other industries that have to compete for business, however, health care has been shifting its focus and working to catch up.

“In 2000, hospitals were more about their C-Suite relationships,” Johnson said.  “Today, those physicians may be employees.”  Relationships today are more geared toward patients.

With the increase of options on where people can go to get their health-care needs met, hospitals have been focusing more on increasing the value and quality of care they offer.  Patient-centered care, integrated services and affordable health insurance are just a few of the results of that direction.

Some hospitals have chosen mergers and acquisitions as a way of potentially increasing the stretch of their value and consolidating costs.  Between 2005 and 2015, the number of hospital mergers in the U.S. doubled with that goal in mind.

If each of those acquisitions came with inefficient supply chain processes, however, the cost-to-value equation could be skewed exponentially, and what was expected to be a cost-saver could end up being another expense.

“As health-care systems face this changing business model, they have to get smarter through the supply chain,” Johnson said.  “We help them realize the benefits of mergers and acquisitions by providing them with a way to do that.”

Five of the largest medical product manufacturers started GHX: Johnson & Johnson, GE Healthcare, Baxter International Inc., Abbott Laboratories and Medtronic Inc. Johnson had spent 12 years with GE Healthcare when the new company formed and he was brought on as part of the leadership team as it came together.

“My background was heavy on the technology side and when I looked at health care, I could see the benefit and impact you could make there as opposed to working on a space shuttle where you don’t ever get to go on the space shuttle.”

Health care, on the other hand, was a service he knew he’d probably use.

What makes GHX successful, according to Johnson, is that the company executes on its mission, which enables better patient care and saves billions through automation, efficiency and accuracy.

GHX goals in the short term include increasing the company’s presence in Europe and helping hospitals increase their development and use of database information. Creating databases that outline supplies necessary for certain medical procedures, for example, could leverage GHX technology to streamline processes and increase success as well as cost savings and quality services.

GHX, headquartered in Louisville, maintains additional offices in Atlanta and Omaha.  The company employs about 650 globally, including 236 in Louisville, with about 50 positions open for hiring now.

In addition to cloud-based invoicing and payments, GHX services include procurement, contract management, order lifecycle management, vendor credentialing and compliance.

The company serves 4,100 healthcare providers and 600 suppliers in North America as well as 1,500 providers and 350 suppliers in Europe. 

“We have a compelling ROI,” Johnson said.