E-commerce, encompassing everything from electronic ordering to just-in-time inventory management, has improved supply-chain logistics in various industries--but not HME, at least not on a wide scale. Fragmented and made up largely of small businesses, the industry as a whole has yet to jump on the electronic commerce bandwagon.
The industry’s technology gurus had this in mind when they formed the Home Medical Equipment Standards Association (HMESA) last year. With the ambitious plan of bringing HME into the e-commerce world, the group set out to smooth the transfer of information between manufacturers and providers by working out standard product naming conventions, product hierachy and units of measure.
Today, a provider’s data-entry employee may take a manufacturer’s new pricing sheet from the fax machine and enter the information into the company’s internal software. The process can be time-consuming and, because update notices may only come once or twice a year, inaccurate. Manufacturers continually change product prices, warranties and other variables, so updates entered manually into a company’s back-end system may be obsolete before the employee finishes typing.
But what if that data could be updated every time a provider orders product? Electronic ordering may make it possible. Every time a provider logs on to a manufacturer’s or distributor’s server to place an order or check on order status, that server could automatically download product update information to the provider’s system.
To bring this kind of convenience to HME, however, all manufacturers need to classify products the same way. Currently, for example, one manufacturer might classify a walker as an "ambulatory aid" while another might place it in its own category called "walkers."
But a new universal HME product classification system, or schema, ratified by HMESA members in the spring and revised twice since, is designed to eliminate the inconsistencies. It identifies six major market areas--home care furnishings, rehab, respiratory, personal care/patient aids, sleep and supplies—then subcategorizes each into market segments, classes and product groups. The system also creates standard product numbers, essentially UPCs tailored for home medical equipment, to be used industry-wide.
The product schema is key for automating a provider’s back-end operations, according to Steve Neese, HMESA president and vice president of customer service and e-business at Invacare, Elyria, Ohio. "There are about 10 different places in the supply chain [in which] the schema makes automation, more efficiency and lower labor costs possible."
HMESA’s next step is implementing the schema in practical applications--and Invacare and The Scooter Store hope to do just that this month. The New Braunfels, Texas-based provider is testing a platform in which it can log on to an Invacare FTP server and download product changes automatically.
Another large provider, Orlando, Fla.-based Rotech, is in preliminary talks with Invacare about using the schema to implement radio frequency identification (RFID). Instead of a barcode, products with RFID have tiny microchips that communicate with a company’s product tracking system. The companies hope to "experiment" with the oxygen concentrator since that particular product "has value tracking it all the way through to the customer," Neese explains. He points out that the technology also has particular potential with oxygen cylinders. "Providers tend to lose oxygen cylinders like they’re going out of style."
RFID’s downside is cost. Putting chips on every product is expensive and, according to Neese, only becomes cost-effective when volumes rise and an entire customer base accepts the technology. High volume is one reason why Wal-Mart--the nation’s No. 1 retailer--has become a pioneer RFID advocate, mandating that its top 100 suppliers begin using RFID technology by 2005.
Although microchips on every product may not yet be practical for all manufacturers, it does represent the future, Neese explains, adding that such technology couldn’t even be imagined without a universal product schema.
With the schema developed, HMESA’s greatest challenge now is attracting small manufacturers and providers. To that end, the group is sponsoring a large booth at Medtrade, Oct. 26-28 in Orlando, and staffing it with a host of association members. At press time, HMESA members included AirSep, bConnnected Software, Fidelis Software (Brightree), Computers Unlimited, Fisher & Paykel, Invacare, The MED Group, National Seating & Mobility, Pride Mobility, ResMed, Respironics, Rotech, The Scooter Store, Sunrise Medical and The VGM Group.
Jim Schaefer, project manager for Waterloo, Iowa-based VGM, hopes to sign up vendors and educate providers at the industry trade show. "Within a year, I hope to have the majority of our vendors online and participating in HMESA," Schaefer says.
For providers, "it’s an issue of time," he continues. HME owners have many responsibilities, the most important of which remains servicing customers, not perfecting information technology in the back office. If providers cannot implement the technology on their own, buying groups will help, Schaefer says, adding that, also within a year, VGM and its participating vendors hope to build an online catalog based on the new schema.
Regardless, Neese says using the schema should not require much infrastructure--at a minimum, a personal computer with a dial-up Internet connection. The schema could potentially "be incorporated into a Dell computer all the way up to an AG Edwards or Oracle ERP (Enterprise Resource Planning) system," he says.
In the years to come, providers will decide whether e-commerce in HME is a success or not. "It’s happening in other industries," Schaefer says. "There’s no reason it shouldn’t be happening in the HME industry."
Today, according to Neese, equipment manufacturers compete on price, quality and distribution; but in the future, he says, providers will ask, "If you want my business, you’ve got to make it easy for me. How easy is it to do business with you, and how much time and money will you cut out of my supply chain?"
"We can’t make anybody use the schema," Neese says, but "the market will ... ultimately demand it."
For more information on HMESA, visit www.hmesa.org.
