EDI in Industries

Health Care EDI

There are various industries that EDI has a firm hold within, and the health care industry is one of those. Within the delivery of health services there is a great amount of paperwork which must be filed, delivered, ordered, compiled and documented. To alleviate the pressure of this paper pile, EDI has been incorporated into the system so as to provide a technological replacement for some of this domination. The standard for the health care industry is HL7, which is also the umbrella organization which oversees the development of standards and their evolution.

It is not only an organization within the United States - there are many other countries involved in HL7 projects throughout the world. They are intended to utilize the standards of the HL7 to organize and develop information exchange using these standards. Currently, HL7 tends to use XML technology in order to exchange documents. However, EDI is also well established within many data transmission industries, and it has been used throughout the health service industry.

It also appears that EDI is enabling manufacturers to meet the record-keeping requirements specified by government acts. The HL7 has long since its inception moved well beyond its initial messaging protocols. Currently it works on various areas of standards improvements. It aims to standardize knowledge representation, which is for the specification of components for context management. Health care data interchange is supported by the use of Health Information Exchange.

XML document standards are being standardized. These advancements are allowing a patient’s record at any point to be represented as an HL7 document. The medical record of a patient, in fact is even able to follow them not just through but between different hospital systems and even to different hospitals. The HL7 has become a foundation standard for universal electronic medical recording. It is used world wide.

Financial Sector

Due to its highly secure nature and speed of transmission, the finance industry also depends on EDI for its data transfers. Similar to non-financial EDI, financial EDI (FEDI) involves data interchange, but it involves payments and movements of money, which involves a financial institution. The partners of the transaction must have a good relationship with their finance institution to make FEDI effective. A growing number of companies are adopting FEDI in the U.S. The flow of FEDI is that the first partner - or sender - in the transaction extracts information electronically from the accounts system. The data is then formatted into a standard EDI. This form is then transmitted electronically to the bank for processing.

The financial institution then puts the data into a format that can be sent to the Clearinghouse. The payment data is transmitted to the second partner- or receivers - bank. The sender’s account is credited, and a receipt sent to them also for automatic accounting purposes. All of this is done electronically. Financial enterprises use these communication systems to transfer funds from their house bank and to receive statements.

Outbound messages such as payment orders and direct debits are carried out using EDI. Also inbound messages such as debit advices, credit advices, bank statements and lockbox data is transferred by EDI. Bank Communication Systems perform the following tasks related to EDI processing: conversion of data from IDoc to EDI and the opposite; message and interchange handling; communication; administration of partner profiles; and monitoring of processing.

Some of the perceived benefits of FEDI are that the purchasing partner enjoys an increase in productivity, a decrease in expenditure due to the electronic nature of the transaction as opposed to paper, a lower likelihood of fraud, and electronic invoicing capability. The seller benefits because it can receive products that are ostensibly younger, decrease the cost of processing due to automation of posting, reduce error incidence thereby increasing quality, and establish regular incoming monies. Hence the trading partners are able to improve each one‘s business without depreciating the others. In this way they improve their relationship with and importance to each other.

Many businesses are adopting EDI to make payments. It allows them to outsource their payments processing, resulting in a single file for all the payment instructions being sent to the bank in an EDI format. The bank can then execute all payment orders, including ACH and wire transfers, and will also print and mail the payable checks. This reduces paper enormously, and heavily decreases errors. All the payments can be dealt with electronically. Conversely, those companies collecting said payments are also able to utilize EDI by having their bank receive the payments, and then send them electronically to the companies’ accounts receivable system for automatic cash application. Again, companies are streamlining and reducing paper wastage.