SEOUL, KOREA - EZmedicom (www.ezmedicom.com) is gaining attention as Korea’s leading medical GPO (Group Purchasing Organization), with recent emphasis on efficiency and cost reduction in hospital management.
EZmedicom, established in 2000, is Korea’s leading GPO. With registered IT-based patents regarding medical e-commerce, logistics system and the associated methods, EZmedicom is applying these methods to real business fields and focusing its utmost efforts on the standardization of medical e-business management systems. To date, EZmedicom has attracted attention as a main indicator driving efficiency in hospital management, conducting projects with major national hospitals including Seoul National University Hospital, Bundang Seoul National University Hospital, National Medical Center, Kangwon National University Hospital, and Jeju National University Hospital, as well as major private hospitals such as ASAN Medical Center, Ewha University Women’s Medical Center/Mokdong Hospital, Hanyang University Hospital, and Gachon University Gil Medical Center
EZmedicom has pioneered the areas of consignment purchase services, logistics, and consignment inventory management, which were known to be difficult areas due to the unique and distinct features implicit in hospital management. This was achieved through MDvan (MeDical system Value Added Network), e-commerce system, and ezWMS (a warehouse management system), supporting the integration of operation processes between hospitals and suppliers. EZmedicom has been performing e-commerce business, focused on the following 3 core service areas: 1) e-commerce solutions, 2) e-based group purchase of medical devices, equipment, and supplies, and 3) e-logistics for inventory management inside and outside of the hospitals. EZmedicom utilizes its consulting specialties and capabilities in the areas of the purchase and logistics to offer customized solutions tailored for the individual needs of each client hospital. The full process, from order placement through stock-in and inventory management to settlements, is integrated into MDvan to allow perfect integration between each system of the hospitals, EZmedicom, and suppliers. Transparency and fairness of transactions are secured in the e-based group purchase through ties between multiple suppliers and the hospitals made through the group purchase. The bar code and mobile-based logistics system enables inventory management at zero or optimum levels through the optimization process.
The EZmedicom systems help improve the performance of hospital management through integration, tying procurement & inventory management and the logistics operations of hospitals, which have been managed individually by each hospital, to the system of EZmedicom. EZmedicom is contributing to the saving of logistics and social expenses incurred between hospitals and suppliers by locating the logistics centers in the self-developed ‘Medical e-SCM System’ at a more appropriate place outside of the hospitals. This is in line with the recent demand emerging from major hospitals for specialized firms capable of executing logistics operations in systematic ways.
Through implementation of a third-party logistics service in hospitals, they can reduce logistics costs and system investments by standardization and specialization of complicated logistics processes, and be provided with data-based indexes while being able to realize a rational logistics process supported by automatic ordering, no charge, no stock, consignment, and automatic replenishment. EZmedicom is contributing to the optimization of hospital management through the cutting-edge logistics system which enables hospitals to pursue cost reduction and operation efficiency, as well as to monitor the accurate doses and validity terms of the reagents through utilization of bar codes and KIOSK together with CCDS (Case Cart Delivery system). This involves the processes of picking and bag-packing the surgical materials individually for each patient as required by surgical cases, in line with real-time operation schedules. The performance of specialized purchases and consignment logistics by specialized GPO firms is universal in most developed countries, adopted as one of the important components of hospital management strategy through which hospitals can secure a competitive edge.
Medical GPOs are companies which can extract price discounts from suppliers by utilizing the buying power originating from mass transactions of multiple parties, enabling medical institutions to create and sustain transparency through cutting edge IT-based e-commerce as well as targeted reduction in purchases, inventory management, and logistics costs while maintaining optimum levels of inventories and safety stocks. This concept was developed and established well especially in the States, while 96% of American medical institutions including Harvard University Medical Center and Dartmouth University Medical Center are using more than a specialized GPO. The competitive edges of GPOs can be summarized with the following three words: efficiency, transparency, and fairness.
Before the emergence of GPOs, the hospital industry had been known as unsuitable for the delivery of services such as consignment purchase, logistics, and consignment stock management. Due to this difficulty, many primitive-style pharmaceutical wholesalers and medical equipment distributors which supply individual medicine or medical devices sprung up domestically. However, medical e-commerce, starting with the establishment of EZmedicom, has enabled medical institutions to enhance their competitiveness and efficiency in purchasing operations through the comparison of medical information, presenting a new paradigm which enables the saving of social expenses by reducing the marketing expenses of suppliers and providing fair trade opportunities for the suppliers in medical e-commerce markets with B2B e-marketplace as a major model.
When the standardized e-commerce of a GPO is adopted for purchase operations, logistics, and inventory management, which have traditionally been performed internally by medical institutions themselves, the opportunity cost incurred by unnecessary inventory management can be considerably cut down thanks to reduction in the purchase budget through comparison of information, the escalation of fairness and transparency in purchase operations, and ease in small and instantaneous purchasing. According to the results of the 2010 audit reports on the operation status of national hospitals issued by the Board of Audit and Inspection, Seoul National University Hospital, which entrusted purchasing operations to the GPO, took first place with 74.68% in the standing orders of the hospitals in terms of successful bid rate, followed by Kangwon National University Hospital, Kyungbuk National University Hospital, and Jeju National University Hospital in the given order.
The better performances of the above hospitals resulted from the fair competition among suppliers derived through the comparison of information on goods and the prices of goods available on the e-commerce systems of the GPO. In addition, in the case of Boramae Hospital, the saving amount reached 10.3 billion won for the savings of 24.50% in 2011 when a consignment contract with the GPO was made. In contrast, prior to the outsourcing contract, the saving amount in 2009 was only 530 million won, representing a savings of 3.57% calculated using the insurance upper limits as standard costs. As for the non-insurance items, this hospital recorded the cost savings of 10.49% in 2010, even though the consignment contract was made in the later part of the year, and recorded an additional cost savings of 7.39% in 2011, compared to 2010. With the introduction of the GPO system in the purchase of treatment materials this year, Kangwondo rehabilitation hospital has accomplished a budget reduction of about 28% compared to last year’s actual purchasing price, providing a noticeable indicator of the improvement of performance of the local hospital management.
EZmedicom recently established an IT research institute with the goal of developing and offering an integrated solution which will be able to present the Korean standards for the processes of purchase, procurement, and logistics in the medical industry. This institute is and will be focused on providing an infrastructure for improving the performance of hospital management and elevating the market competitiveness of suppliers through technology innovations in IT-based medical e-commerce, driven by the concentration of R&D efforts on customer-oriented solutions with the creation of an integrative framework and standardized interface, or integration of the communities.
By Lee Jae-seung(jasonlee@koreaittimes.com)
