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ERP, Supply Chain Reduce Healthcare Tools and Supply Spending

Healthcare organizations need to add ERP and supply chain solutions to their IT infrastructure to keep track of tools and supplies.

ERP, supply chain

Source: Thinkstock

By Elizabeth O'Dowd

- Losing track of supplies and medical tools is an unacceptable reality for healthcare organizations. However, adding advanced supply chain management and enterprise resource planning (ERP) solutions to health IT infrastructure can reduce costs associated with medical tools and material and increase patient satisfaction.

Forty percent of healthcare organizations stated that they have had to cancel surgical cases because of a lack of supplies, while another 69 percent reported that they needed to delay a case because of missing supplies, according to a recent Cardinal Health survey.

Many organizations also reported expired products being used or that they have seen a patient be put in danger due to a lack of needed supplies.

Many clinicians feel that inventory management is complicated, which leads to clinicians hoarding supplies so they won’t be without or wasting supplies.

This problem can be traced back to the inefficiency of current inventory management solutions. Not only does this lack of organization waste money, but it’s also putting patients at risk. Manual inventory processes are no longer practical, especially when there are more advanced solutions available.

Adding automation and analytics to inventory management can make a huge difference in how efficiently supplies are ordered and organized. Supply chain and ERP solutions are critical in making sure time and money are not wasted.

Visibility and collaboration between systems will help cut costs by making sure products are being used and additional products are not being requested before they are needed.

Using more advanced technology to achieve better visibility can save healthcare organizations money by showing system administrators which parts of the supply chain solution are pulling their weight.

A report released in 2017 suggested that virtualizing and centralizing supply chain management will significantly improve the control organizations have over the cost of their supplies.

Virtual centralization integrates operations based on the market instead of the health system. For example, a consolidated service center that brings together geographically based groups of hospitals to form a single entity to centralize operations was discussed in the report. The consolidated service center acts as the central location for distribution, contracting, procurement, and customer service.

Virtually centralizing supply chain data allows larger healthcare organizations to connect with smaller organizations and share data with those smaller entities. This saves smaller organizations from needing to implement a full IT system on their own.

It would also save on staffing costs because administrators don’t need to be present at every location to manage and monitor the solution. Instead, the virtualized data can be accessed remotely from any of the participating organizations’ secure networks.

ERP tools also offer solutions on how to improve information flow when it comes to medical supplies and IT infrastructure systems.

A 2017 Black Book report revealed that healthcare organizations are underinvested in ERP technology.

"Crucial back-end software that manages finance, supply chain and inventory management, purchasing, payroll and coding have been disregarded into a confused entanglement of different products that don't communicate and left executives with the inability to realize cost savings in preparation of value based care," said Black Book Managing Partner Doug Brown.

"There has been user opposition to deploying a new or upgraded ERP, perceived as carrying a high price tag in a time when clinical deployments overwhelmed hospital staff and budgets."

Although adding new technology onto current infrastructure may be overwhelming for some users, it will save organizations money in the long run, allowing for future spending in other areas that are lacking technological sophistication.

Organizations need to know what their tools are doing and how their supplies are being used to function efficiently as a business. Without the proper tools in place, entities will lose money on tools and supplies, resulting in dissatisfied patients and clinicians.

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