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Shopping on the Internet: a beginner's guide.

Cruising along the Internet superhighway has become a way of life for many Americans, who use the technology for both personal and professional reasons. One growing use of the Internet in both arenas is taking advantage of the Internet's many "shopping plazas" to acquire goods and services. With the proper guidance, nursing home facilities need not be slow to join in on this commercial traffic.

Gerard Nussbaum, senior manager at Hamilton HMC, New York, is one expert who can offer that guidance. He says that any nursing home can use the Internet to at least acquire information about products before making the purchase decision, thus shortening the evaluation process. And, he notes, because most Web sites - which he calls "well-designed brochures" - do not track who is visiting them, you can browse to your heart's content without triggering a follow-up sales call for which you may not be ready.

But it is at the point of making a purchase that the nursing home must make another decision: whether to actually conduct the purchase over the Internet. For infrequent purchases, e.g., capital expenditures such as portable x-ray machines or sophisticated electronic items, Nussbaum suggests that buyers veer away from the Internet and remain firmly traditional. With these kinds of products, he says, a buyer needs to interact with a vendor representative, as such purchases require a buyer to do more digging for information and make sure of specifications. When buying commodity items and consumables, though, Nussbaum says Internet commerce is a viable way to go.

Making an Internet purchase connection can vary greatly in sophistication, Nussbaum says. The novice or smaller buyer can begin simply by using a Web browser to find a vendor and then have staff enter an order over the internet. At a more advanced level, a buyer can get into actual electronic data interchange (EDI), where the computer system is linked to a vendor's and to direct purchases from the vendor's stock, with paperless payments flowing in the other direction.

The healthcare industry is far slower than others to have picked up on EDI in purchasing, says Nussbaum, in part because of a lack of standardized coding systems. One trade group, the Healthcare Electronic Data Interchange Council, is working with vendors and purchasers to develop a common system of coding that should reduce labor costs and increase accuracy while facilitating the growth of EDI.

The most sophisticated purchasing systems, says Nussbaum, are linked to automated materials management systems using bar codes and scanners that monitor what the facility has used. These can automatically reorder low supplies after a quick review by a staffer. They can even attribute the use of a specific item to a particular patient and electronically charge that patient when appropriate.

Clients range along a wide spectrum of materials management sophistication, says Nussbaum, noting "You can't just keep everything in a closet and tell the staff to take what they need, or you will be sure to run out. And if employees are running around trying to figure out where the supplies are, or if the supplies are not there at all, you are obviously not providing a good quality of care." Inventory automation can help you determine whether your supply use is "going out of budget. If you can track it, you can control it." However, automated inventory, like buying over the Internet, remains a tool, not a goal: "You have to decide if there is a cost-benefit tradeoff to automating your supply system - will you get back in lowered labor costs and added accuracy what you invested?"

Facilities deciding that electronic commerce makes sense for them on some level should begin by identifying whether any of their current vendors can support it, and at what level of sophistication. "Essentially, electronic commerce means that you are operating on their system," he says, and this assumes a certain amount of support is provided by the vendor.

Some healthcare vendors have made it easier for the smaller nursing home facility to buy over the Internet by setting up a clearinghouse of vendors as an electronic ordering vehicle. The clearinghouse serves as a middleman between buyer and seller and offers the buyer a single point of ordering from many vendors. This is advantageous for both sides, says Nussbaum, giving the smaller vendor a more competitive stance against the bigger merchandisers, while easing ordering for the facility. For the nursing home, says Nussbaum, the internal operations of the clearinghouse should be transparent, with the buying institution being able to discern who the seller is. A clearinghouse approach, then, is something for would-be buyers to look for.

The second step to electronic purchasing for nursing homes, says Nussbaum, is to make sure the facility's own internal systems are integrated, both electronically and managerially, so that it can literally get its act together. In short, you must have sufficient information systems skills to set up the machines and get connected. It is also important, from a managerial viewpoint, to remember that ordering supplies electronically doesn't leave a paper trail, as a fax order would. "You need to develop a process to make sure you know what you have ordered."

Third, after you have investigated your vendors and are ready internally, you must next negotiate your access to the Internet. This can be done at the most elementary level through an ISP, or Internet Service Provider, which can hook your facility up to the Internet. Using a Web browser like Netscape or Internet Explorer to gain this access can actually benefit the smaller long-term care facility because, says Nussbaum, the entry cost to conduct commerce on the Internet amounts to only about $30 a month, and a smaller facility can spread that cost over the number of orders entered each month. As the more sophisticated systems needed by larger institutions, such as inventory automation, come into play, a much higher degree of equipment investment, as well as personnel support, is needed.

Beyond the process of setting up, says Nussbaum, the biggest concern about electronic commerce is security. "Remember that you are conducting a financial transaction across a publicly accessible medium, and a hacker with some bizarre bent of mind can elect to encumber a facility with a liability for supplies that they had no desire for." This threat is, in fact, really far more threatening to the vendor, Nussbaum notes, and most vendors are therefore very careful to offer only secured sites to the buyer and safeguard information. Ultimately, it works much the same way as purchasing by credit card, with safeguards built in.

If there is one overall lesson for the nursing home looking into electronic commerce, Nussbaum cautions, it is that "you must first focus on what you are trying to accomplish with electronic commerce, rather then just trying to 'be cool' by using it. Remember that, ultimately, electronic commerce is a management process that just happens to use that technology as a tool. First, you must have a direction to go in before you go off looking for solutions."

The Beverly Enterprises Experience

One major long-term care chain that is using electronic purchasing to advantage is Beverly Enterprises. According to Beverly's director of procurement operations, Jim Glensky, the chain has just finished linking its 600 nursing facilities to all vendors via an Intranet-based ordering system that essentially creates a private network based on the Internet. They are linked via satellite to the system headquarters in the Beverly corporate offices in Fort Smith, Arkansas, and from there purchasing is handled through DSSI, a purchasing clearing house based in Milwaukee, Wisconsin, that won the nod from among 40 contenders.

Now, Beverly facilities can order and be billed for such items as medical supplies, mattresses, linens, therapy products and other needs, all completely electronically. "It's a giant step forward from what we had before," says Glensky.

An internal reengineering study Beverly had done some four years ago recommended that the chain turn to automated ordering, says Glensky, and its development was well under way when the World Wide Web burst upon the horizon in the mid-1990s, giving the company an improved platform for such a system through DSSI. The Beverly facilities have since given paperless ordering an enthusiastic response, as they benefit from faster, real-time service. Shipments are out generally within a day, allowing substantial inventory reduction. Plus, purchasers get to see the product on the screen before ordering and can more clearly understand specifications, such as sizes of wheelchairs or uniforms.

Meanwhile, vendors also benefits, Glensky points out, as they can reduce overhead on marketing, eliminate accounts receivable, and speed cash flow. "It's win-win for both sides," he says.
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Author:Grahl, Cindy
Publication:Nursing Homes
Date:Jul 1, 1998
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