EDI and electronic mail - electronic data interchange

Healthcare Financial Management, Nov, 1993 by James J. Moynihan

How does the use of electronic mail (E-mail) relate to electronic data interchange (EDI)? Electronic mail and EDI are both tools to help a hospital communicate with its trading partners. E-mail and EDI have different applications, but providers will be using both more as the decade progresses.

The world of E-mail

Many organizations have used E-mail for more than a decade for internal communications. Many PC users now use E-mail designed for use in a local area network. How do E-mail and EDI differ? EDI is used for computer-to-computer transmission without human intervention. E-mail is meant to be read by the person addressed. Another difference between the two is that most E-mail users are exchanging the electronic equivalent of interoffice memos with coworkers. They seldom exchange E-mail messages with others outside of their organizations. In contrast, most EDI exchanges are between different organizations.

Wanted: Interorganizational E-mail

There is a business need for electronic messaging between different organizations. Avid EDI users within a hospital have undoubtedly wished to send messages to those outside the hospital. Unfortunately, the E-mail capability of most providers usually does not allow for such communications because the E-mail system of one organization is unable to "talk" to the E-mail system of another organization without conversion software to allow for this exchange.

As is the case with EDI, standards are needed to conduct business electronically. The standard for E-mail is called X.400.(a) It is the international standard for electronic interpersonal messaging.(b) This standard received the designation X.400 because it was introduced in recommendation number 400 to an international telecommunications standards body in 1984. The X.400 standard first released in 1984 is the most widely supported version of the standard. Other versions were released in 1988 and 1990. Although the newer versions contain innovative features, the oldest version of X.400 has attractive solutions for doing business electronically.

Since the use of intercorporate EDI and E-mail have been growing in organizations, it is appropriate that the 1990 version of X.400 was extended to include a new EDI-specific protocol called X.435. The X.435 standard allows a sender to incorporate electronic data of different types into one package for one receiver. In the corporate world, that might include sending an X12 purchase order (850), an electronic blue print file (called a CAD/CAM file--computer-aided design/computer-aided manufacturing), and a fax message.

In the healthcare provider community, a patient accounting department can send an X12 claim transaction (837) and a fax of the operative report to a payer. A hospital also can send demographic data about a patient to a nursing home in an X12 format that could be captured by the patient accounting system of the nursing home and also include a text message with a discharge summary.

Widespread use

The X.400 standard is reportedly more widely used internationally than in the United States. In the United States, however, the aerospace and defense industries moved to a widespread use of X.400 because trading partners in the industries saw it as necessary.

When will trading partners in the healthcare industry embrace the X.400 standard? With whom will providers exchange E-mail? Providers considering investing in E-mail technology today face a fragmented community of many payers. While Medicare is forging ahead with EDI, it is unclear how long it will be before the hundreds of TPAs, PPOs and HMOs accept electronic information.

Payers, on the other hand, have a transaction volume dominated by physicians. They could invest in E-mail capability today for hospitals, but that may not be a cost-effective investment if physicians do not use the system.

How quickly EDI and E-mail come into use may depend on the pace of healthcare reform. Healthcare organizations want to be sure that they will still be financially stable before they make major technology investments. In addition, if healthcare reform does create accountable health plans, physicians, hospitals, and payers all will be at risk of losing money for patient care reimbursed under a capitated plan. Although hospitals and physicians may retain separate corporate organizations, they will need to work together to manage patient care efficiently. Just as it made sense to link departments of a hospital with internal E-mail, it will make sense to link the participants in an accountable health plan.

Using E-mail is not technologically challenging. The challenge is to change business procedures to take advantage of the technology. If senior managers do not use networks to communicate, neither will their employees. As is the case with EDI, E-mail can save money and improve service, but the biggest gains will come from imaginative financial managers who use the technology to change the way in which their organizations do business.

a. X.400 is pronounced "X four hundred," not "X period four hundred." Since providers are just now learning about X12 standards and the X.400 standard, some confusion is understandable. The standards that are in the X. series are promulgated by an international telecommunications standards body called the CCITT (an acronym for French words that mean an international committee for communication standards). In contrast, the ANSI committee for EDI standards is called X12, and its standards have names and numbers such as Invoice (810) and Health Care Claim (837). References to X.12 EDI standards are incorrect.