A clean and comprehensive customer master unlocks vital insights to give life science companies a strategic edge. This unified database contains comprehensive information on customers, enabling more efficient processes, more accurate pricing, better decision-making, and improved customer relationships.
Managing these databases requires considerable effort and resources. Incomplete and outdated customer masters plague many life sciences companies, eroding revenue and creating dissatisfied partners and customers.
Problems created by poor customer data management
The customer master is a dynamic entity requiring regular maintenance. To confirm appropriate prices, rebates, and payments, life science companies must correctly match each customer with their precise contracted pricing and verify their eligibility for incentives. Incomplete or inaccurate identifiers and missing and outdated data contribute to revenue losses through:
- Incorrect discounts, rebates, and prices.
Accurately assigning each customer’s cost of trade (COT) designation is essential to applying appropriate discounts. Modern contracts contain complex structures that vary widely between customers, and incentive eligibility fluctuates. An outdated or incomplete customer master leads to incorrect COT assignments. Companies may overlook warranted discounts, incorrectly extend discounts to ineligible trading partners, or charge the wrong price, resulting in strained relationships and uncaptured revenue. - Chargeback mistakes.
Without complete and precise customer identifiers, chargeback requests cannot be automatically verified against pricing contracts. To determine each transaction’s validity, companies often resort to expensive manual reviews, which are inefficient, resource-intensive and leave a significant margin for error. Invalid chargebacks still slip through, and systems may improperly reject eligible chargebacks, resulting in lost revenue and disgruntled partners. - Government price reporting noncompliance.
An incomplete customer master database directly obstructs accurate government price reporting. Key drug pricing calculations like Medicaid Unit Rebate Amounts and 340B ceiling prices rely on COT tiers. Inaccurate COT classifications lead manufacturers to miscalculate mandated rebates and discounts and submit incorrect reports. Companies risk jeopardizing compliance, potentially incurring financial penalties or even expulsion from the Medicaid Program. - Delayed customer onboarding.
With incomplete or inaccurate information undermining customer verification processes, manufacturers struggle to efficiently provide potential partners with price quotes. These delays result in customer frustration, lost revenue opportunities, delayed cash flows, and resource inefficiency.
Customer master data challenges
While current and accurate customer masters are critical, organizations face many obstacles in achieving this goal.
- Complex data.
Customer masters must reflect an intricate web of published affiliations (GPO membership, private equity ownership and government program participation), contract eligibility (tiered pricing, rebate and resolved price) and a myriad of unique identifiers. A single physical customer location may be associated with multiple identifiers — such as Drug Enforcement Agency (DEA) registration number, Health Industry Number (HIN), or Public Health Service registration, GPO, distributors, DUNS and GLNS — and those IDs might be used inconsistently or change over time. All of this data must be synced correctly.
Additionally, many diverse sources, including public databases and specialty vendors, generate customer data, and multiple software systems gather it. The data arrives in many different forms and must be cleaned and standardized.
- Evolving data.
Customer data changes constantly. For example, a hospital may join or leave integrated delivery networks and group purchasing organizations (GPOs), impacting its eligibility for customized contract pricing. Manufacturers may receive outdated information, partial updates, or nothing at all about these modifications. Without current and complete data, companies make inaccurate COT classifications. - Costly maintenance.
Upholding customer master data requires substantial resources. Manufacturers must manually verify entities and their GPO membership status. Many organizations add more staff to compensate for the volume and complexity of the maintenance process, adding significant expense to the endeavor.
Best practices for managing customer masters
Manual processes can’t keep up with the data volume and rapid changes. Effective customer master data management requires automation and system integration.
Manufacturers gain a holistic view of their customers by connecting public data feeds, sales systems, ERPs, and other touchpoints. Automated data gathering cleans, standardizes, and immediately enters information into the system. The centralized data repository produces comprehensively validated customer identifiers and affiliations and eliminates fragmented, manual verification processes. Immediate visibility into client eligibility for custom contract pricing ensures accurate chargebacks, rebates, and reporting. Automation and integration also require less time and resources, reducing the cost of database management.
Technology accelerates customer onboarding by streamlining verification and data entry. Expedited onboarding enhances customer experience and enables faster cash flow from new business. Clear overviews and seamless access to GPO rosters empower organizations to capitalize on mutual growth opportunities.
Mastering customer data management unlocks lasting competitive advantages across pricing, compliance, and customer experience. Streamlined data aggregation and integrated systems enable more agile, compliant business processes and free time for strategic planning and innovation. Model N is developing solutions to help life sciences companies better manage their customer master.
Want to learn more about how integrating data and analytics can help your organization transition to revenue optimization? Watch this webinar from Model N experts.
