Last week we examined the five areas leakage occurs between EHR and ERP. As you consider if ERP-EHR integration is worth doing, let’s evaluate it under these conditions:
- Muchness – How much revenue will the project return?
- Soonness – How soon will that return be produced?
- Sureness – How sure are we to get the return being promised?
Supply chain integration has a significant payoff. One of our health system clients in the Midwest, by integrating their ERP system to their EHR, was able to increase supply charges by $15 million in six months. Amazingly, 100 percent of that return came from lost supply charges (that’s not taking into account the human resource cost savings) while at the same time improving log posting time by two days, getting close to real time. So, the muchness is there.
Results in the previous example were returned in just six months – 26 weeks. Of course, the speed of results depends on what you decide to focus on.
The good thing about sureness is that with a minimum of effort you can assess the leakage before engaging in a project like this. You just need to look in the five areas of leakage. Once you have assessed the scope of the leakage in each area, you can easily determine whether it’s a project worth doing. So, you can be 100 percent certain that it’s going to produce a result before you even start.
How Complex Is Supply Chain Integration?
What’s involved to fix the problem boils down to these four things:
- Data integration between ERP and EHR
- Optimizing EHR documentation
- Reengineering some processes, and
- Developing reports, analytics and business intelligence.
So it’s not rocket science, but it pays.
Let’s compare that to other initiatives in the marketplace.
Cutting Costs – The Top Priority
Numerous surveys show that the top priority for healthcare executives in 2017 is cutting costs. The real question is, which strategy is the best one to get to that goal? According to the Economist, these are the top five strategies that executives are looking at:
- Reviewing and optimizing current operational and clinical processes
- Eliminating unprofitable services
- Seeking lower-cost suppliers for inputs
- Partnering with other hospitals/hospital groups to create economies of scale
- Increasing role in preventative/primary care and integrated care to reduce costs for value bases, population care contracts
Supply chain integration would fit into the top category, but let’s take a closer look at what ERP and EHR projects are on the top of executives’ minds right now:
If you look closely, you’ll see that all of these projects have one of two things in common:
- They either can’t move the dial far enough – meaning they can’t produce big enough results (finding even lower cost suppliers for example, is not going to move the dial much because margins are already low), or
- They’re very complex, longer term projects that have a very low degree of “sureness.” Population health and risk contracts for example, are complex, tricky plays that may not produce a return at all.
For these reasons healthcare executives should be considering supply chain integration – because it’s big enough to make a difference and it’s a very sure project.
I’m not the only one saying that. In their recent 2017 trends report, Black Book Research listed garnering ERP efficiencies as the third most important trend for healthcare executives for 2017. The same research uncovered that 93 percent of CFOs agree that true costing for value-based care cannot be accomplished without supply chain efficiencies and ERP.
Supply chain integration isn’t sexy – but it can produce significant results. It scores well on “Muchness” with returns sometimes in the tens of millions. It scores well on “Soonness” with projects producing results within 12 to 20 weeks. And it scores well on the “Sureness” because we can assess the return before we even start. Compared to these other projects it’s an easy choice.
Healthcare organizations should assess these five areas of leakage between ERP and EHR in their own organizations to determine if an integration project represents low hanging fruit for them. If the answer is yes, or you need assistance in evaluating your technology, get in touch to get started.
James Muir is vice president of business development at Avaap, specializing in helping healthcare organizations using Epic create measurable improvements in financial and clinical performance. Using best practices developed by Avaap’s team of deeply experienced revenue-cycle and clinical Epic practitioners, James helps clients discover and execute the strategies that best improve their business outcomes.