Has GHX become a public utility?
It happened on July 10 of this year. The GHX digital exchange, which serves the vast majority of acute care facilities in the country, went down unexpectedly. While periodic service outages at GHX are not uncommon, the July 10 issue lasted for 14 hours.
GHX points out that since orders, called “traffic” at the exchange, came in throughout the hiatus, the average processing delay was just over three hours. But this fact belies the true disruption in our sensitive supply chain, because downstream operations depending upon data flowing through the exchange were delayed for the full 14-hour period.
In today’s lean supply chain, where Just-in-Time inventory management is considered a best practice, such a hiccup at the exchange can prove very costly to trading partners. Distributors like Claflin, for example, not knowing when to expect order flow to resume, were paying a large operations workforce to simply wait. JIT customer inventories don’t allow for us to just skip a day; truthfully, even bulk distribution accounts have something on every order that they need right away. By some means, we must process every day’s orders that day.
On July 10, extensive overtime and a weary and frustrated crew were the end results, though delays in customer deliveries were minimal. This was not the case across the board, however, as many other distributors simply didn’t ship the next day, leaving some customers scrambling over the weekend. Needless to say, the safety limits of the supply chain were seriously tested.
Of course, such disruptions are what contingency planning is all about, and all supply chain stakeholders have them. But how many of these plans have been updated to account for this change in the way replenishment data is now communicated? It doesn’t seem that long ago that most Claflin customers sent orders to us through point-to-point EDI using file transfer protocol. We assumed most customers had maintained this capability as a backup. We found out that in most cases, these files have been re-formatted to accommodate the exchange. The few customers with the technical capability to forward files to us directly showed that they would have to be re-mapped to our system to process them – not something we could do for every customer in one day. Our capacity for phone and fax ordering, while somewhat flexible, is likewise now limited. The question of what outcome would have resulted from an even longer or more serious breach at GHX soon arose as a significant concern.
My purpose here is not to be critical of GHX. We acknowledge that by aggregating and standardizing many elements of routine replenishment data flow, they have enhanced the overall efficiency of our channel. Their services to their end user customers are apparently considered a good value, given their growth in market share. Having de-briefed with their management team, we are satisfied they are taking appropriate steps to improve the stability of their platform and have an appropriate appreciation for their critical role in the supply chain of a critical industry.
The fact remains, though, that they are a private business, relatively unregulated by either the government or the industry. They are not a monopoly, so their customers do have options, but they don’t discuss their market share, which a casual observer might conclude is quite dominant. The industry, to include GHX, might consider a serious dialogue about oversight of an entity that – whether by purpose or design – has evolved into a public utility, raising new issues over the security of the supply chain.
In the meantime though, the events of July 10 should serve as something of a wakeup call to industry planners, again to include GHX and their customers. While aggregation through an exchange may be efficient and convenient, some redundancy in communications with critical trading partners seems prudent if not essential.
GHX’s mission remains the same today, as it was from our inception – to enable better patient care by increasing healthcare automation, accuracy and efficiency. We remain committed to this mission and working closely with our customers to help improve the efficacy of healthcare.
That being said, for the first time in 16 months, we experienced an outage that impacted our customers and resulted in a three-hour delay for the majority of our exchange customers. GHX strives at every turn to eliminate any interruption of service and to work with customers to help ensure that continuity plans are in place.
Additionally, we have made an investment of over $30 million into our platform to deliver new capabilities to healthcare that are best in class for any industry. Importantly to our customers, this includes advanced data security, so that it is the only exchange in healthcare with data encrypted on the fly and at rest to protect against threats and meet new regulatory requirements. We purpose-built this platform to be more resilient than ever before and enable faster recovery when things do go wrong. Currently, all customers are scheduled to be migrated to the new platform by the end of the year.
We want to continually earn the right to serve healthcare and automate even more of the business processes between buyers and sellers. To that end, we are regularly reviewing continuity and contingency plans and learning how we can best create improved processes that can be implemented on the rare occasion when we do have outages to ensure that each and every patient has the right product at the right time.