In any merger, it’s not just staff and facilities that must come together but also the various technology platforms that support them. However, when disparate IT systems collide, chaos is often the result. Getting two mismatched systems to work together is a bit like trying to connect an iPhone charger to a Samsung Galaxy.
Most organizations are attuned to this dynamic when dealing with clinical systems and electronic health records (EHRs), but the core operational systems that drive financial, supply chain and workforce management often receive little attention. Healthcare organizations going through a system integration can’t afford for streamlining operational healthcare IT platforms to be an afterthought, as disparate platforms can limit efforts to standardize and create efficiencies. These operational platforms are critical to driving the return on investment that organizations expect from an acquisition, as leadership seeks to optimize supply and labor cost while simultaneously improving patient care.
Enterprise resource planning (ERP) solutions are the backbone of a health systems’ operations. With increased consolidation in the market, the growth of post-acute care networks and new provider payment policies that require alignment (e.g., shared savings and bundled payment models), ERP technologies help organizations manage their supply chain, financial and workforce management practices. And when combined with business intelligence solutions, they enable health systems to benchmark performance, improve processes and drive the implementation of system-wide decisions.
Start the conversation early
When contemplating a merger or acquisition, it’s important to start the ERP conversation early in the process. Leaders need a baseline understanding of what systems are already in place, as well as the maturity of existing platforms in order to create an effective IT integration strategy. This helps to avoid confusion and allows supply chain leaders to be ahead of the game when looking to streamline operations soon after an acquisition is given the green light. Additionally, it’s important for leaders to have clarity on prospective financial targets, goals and efficiencies that they hope to achieve from an acquisitions and the schedule to realize these efficiencies should be calibrated with the plan to integrate core ERP systems.
Healthcare is a unique area to tackle
Timing is critical on ERP implementation. Most major ERP vendors support many other industries like retail or manufacturing. While they may seem like the safe choice, it can take years to customize their platform to work for a health system. Since timing is of the essence when trying to drive savings, decision makers should consider partners that focus on healthcare and can rapidly implement these systems to quickly achieve value. It’s also important for healthcare organizations to take a closer look at platforms that are designed to meet the current and future demands of providers. For example, a platform that simultaneously provides visibility into patient outcomes, supply chain activities and workforce management practices can help health systems deliver the best care at the lowest cost – a crucial part of success in a value-based care environment.
Take a fresh perspective
Don’t let software become a personal preference item. Opinions are like kidneys – everyone has at least one. And after an acquisition, there are undoubtedly strong preferences to maintain the status quo. However, the period after an acquisition is the time for bold moves. For example, when John C. Lincoln and Scottsdale Healthcare in Arizona were going through a merger to create HonorHealth, leaders realized they had multiple ERP systems, item masters, different contracts and pricing. They had to quickly decide on one single, end-to-end solution to manage their supply chain and financial backbone. Premier helped them streamline their systems and go live earlier than their initial estimates at a fraction of projected costs, all while getting equal or better functionality.
It’s all about the data
ERP is a powerful tool, but it is only as good as the data that resides in it. Rapid changes are expected in healthcare, in wake of new products, supplier mergers and acquisitions, and price fluctuation. It’s imperative that health systems accurately maintain this information on a day-to-day basis, or the value of an ERP system will be diminished. New cloud-based ERPs include content sources and tools to maintain this data.
Consider the cloud
In an era of scarce IT resources, health systems need their best technical talent focused on patient care systems and EHRs. For everything not core to patient care, consider the value that the cloud can offer. By working with a cloud-based ERP provider, healthcare leaders can access the latest technology, mitigate security concerns, control costs and strategically deploy their IT employees.
Understand the long-term total cost of ownership
Historically, ERP systems have been loaded with hidden costs only realized over time. Most traditional vendors require major upfront investments in hardware, software and consulting. Just when you think you’re done, it’s time for a new release, requiring updates that cost millions in new investments. The advent software-as-a-service (SaaS) providers offer a new approach with fixed-fee implementations, predictable costs and a clear long-term value proposition.
When it comes to healthcare, an ERP solution should be tailored to the unique needs of a health system, but it shouldn’t break the bank. It is also imperative for ERP vendors to help health systems achieve business goals and maximize savings at the same time. As healthcare organizations are doing “more with less,” supply chain leaders have countless tools and solutions at their disposal. ERP solutions can be a valuable platform for cost management, but the key is ensuring these potential partners understand the industry challenges providers face and can quickly uncover new opportunities to deliver care more efficiently.
Bill Marquardt is vice president of cost management solutions at Premier Inc.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker’s Hospital Review/Becker’s Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
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