EDI in Healthcare: Current Market Status and Future Forecast

EDI in Healthcare: Current Market Status and Future Forecast

Despite numerous technological advances, especially those driven by the recent Covid-19 outbreak, the healthcare industry still relies on an enormous amount of paper and manual procedures in the public and private sector. How can an EDI system (electronic data interchange) change that in the coming years?

Every day, data collection and exchange processes force staff at all levels of healthcare organizations to spend unproductive hours on routine administrative tasks. The trading partners are very heterogenous, from global pharmaceutical players, SMEs and small service providers to consumers, each with completely different requirements in terms of IT infrastructure. As a result, the healthcare sector processes many unstructured documents, most of them in paper, fax or email format. Only some highly specialized branches, such as insurance clearing centers and pharma wholesalers, have already opted for standardized and automatic document exchange. 

EDI in the Public Sector: Obamacare and PEPPOL Improvements

Initiatives to improve this situation started in the early 1990s with the design and later introduction of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 in the USA. Previously, the USA healthcare industry was using over 400 different medical forms, mostly paper-based. Over time, the processes involving healthcare data have been switched to structured formats using EDI software. This was brought to another level by the 2010 Obamacare Act.

In Europe, the European Union supported the creation of PEPPOL (Pan-European Public Procurement Online), a non-profit organization that provides a set of technical specifications that can be implemented in existing eProcurement solutions and eBusiness exchange services to make them interoperable between disparate systems across the bloc. In comparison to the USA, the system will scale back and allow, at least for now, the exchange of a limited set of document types that include e-orders, e-advance shipping notes, e-invoices, e-catalogs, message level responses, etc. It is supposed to become the standard Europe-wide, but the situation remains rather fragmented:

• The UK’s National Health Service is one of the leading healthcare providers in Europe. Instead of creating its own platform, it opted for one of the local e-invoicing providers. The service has been available since 2014, as either an  interconnection with the provider (your provider connects to the one from the NHS) or via PEPPOL. Currently, a handful of different document types are available.
• Italy is one of the most advanced countries in Europe. Italy opted to use a national ordering platform called Nodo Smistamento Ordini (NSO) for orders, and another national system, called Sistema di Interscambio (SdI), for invoices. Since 2019, the invoices have been obligatory for all companies, and since January 2021 for orders in healthcare sector.
• In Germany, only state-owned hospitals and pharmacies have been using the central platforms ZRE and OZG-RE to exchange of invoices since November 2020. For now, there are no plans to introduce further document types.

In other European countries, there are currently no obligations but more and more national healthcare providers are joining national e-invoicing platforms. It may be assumed that they will follow the Italian model, where the first obligatory document type will be invoices, followed by orders, dispatch advice notes, and more.

Unfortunately, other parts of the world are not as advanced. APAC and Latin America still have no regulations or major initiatives. Some of the countries are looking to the European PEPPOL initiative. In general, the public sector is not so much driven by efficiency. Hence, the obligation to adopt other document types takes more time

EDI Software in the Private Sector: Optimization Strictly Connected to Core Business 

The situation in the private sector differs significantly, as there there are no nationwide obligations except for in Italy. All structured file exchanges are purely the initiative of private parties. The trend is that, after optimizing the core business, companies start to look for efficiency gains in other places, such as their own supply chain. Most companies in the healthcare industry are members of industry-specific or country organizations that have their own prerequisites, formats and standards to improve inter-industry document exchange and serve clients better.

Most of the structured file exchanges are strictly connected to the parties’ core business. For example, pharma wholesalers and big pharma streamlined their document exchange with their clients (wholesalers and pharmacies). Although wholesalers managed to improve turnover, they have been working for years on smaller margins, so seek further optimization. All wholesalers are connected to an EU-wide database-based counterfeit protection system for medicines – the securPharm system. This enables them to identify potential counterfeit medicines by scanning, preventing them from entering the pharmacy.

Looking at the influence of the pandemic, hospitals were hit especially hard because of the lack of lucrative procedures that had to be postponed. Hospitals in Western Europe still have a lot to improve in the area of digitization of their core business, not to mention supply chain optimization. Poland is one of the early adopters of digital information exchange between hospitals, pharmacies and the state health service. In each European country, the sub-industry has its own standards and specifications in terms of electronic document interchange. The current market status shows that the adoption of EDI would be higher if not for high implementation costs. However, the benefits of implementation, such as preventing fraud, tracing deliveries and exchanging documents in real time, outweigh the financial disadvantages, also because of the opportunity to save costs in the future.

Forecast: Dynamic Growth and the Development of Regulations

According to different sources, the value of the market for EDI in healthcare is expected to grow by 25 to 40% in the next five years. This is no surprise, as there is simply a lot to be done to improve all sorts of processes, mostly that are not connected to the main income sources. The biggest markets will be North America and Europe, followed by APAC and Latin America. The MEA region will have a marginal impact. What is important is that the public and private sectors will be brought together with more regulations affecting the two at the same time.

More and more document types will be exchanged electronically. For example, the introduction of e-prescriptions will further modernize and digitize the pharmacy market. Here, full-service wholesalers and partners from the pharmacy sector will be offering digital platform solutions that provide added value for patients. Troubled healthcare providers will seek mergers to increase competitiveness, or be acquired by bigger groups that seek to outsource any non-business relevant services such as EDI software.

The creation and introduction of country or sub-industry specific formats and specifications is expected to improve the adoption of EDI significantly. Central regulations and cost reductions via centralized exchange platforms will lead to a significant decrease in the costs of digitization. More and more companies in the healthcare industry will seek professional help in adopting either organizations’ or national standards and formats. Overall, the future of EDI software as the most accessible and beneficial tool for improving structured file exchange seems to be bright.

Author: Piotr Jagiełło Consulting Director at Comarch
Contact: piotr.jagiello@comarch.com or LinkedIn