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Value-Based Care Revives Interest in Healthcare ERPs

Value-based care initiatives emphasize the need for healthcare organizations to get the most out of their IT infrastructure technology, reviving interest in ERP systems.

By Elizabeth O'Dowd

- Healthcare organizations have shown a renewed interest in enterprise resource planning (ERP) systems as value-based care initiatives become a priority for C-level executives.

ERP revival in healthcare

According to a survey conducted by Black Book Market Research, the healthcare industry remains underinvested in ERP technology while technology funding priorities went to cybersecurity, population health, and analytics over the past year. As a result, many organizations are without an ERP solution to manage new IT infrastructure initiatives.

ERPs allow organizations to access an integrated view of backend systems in an IT infrastructure for better interoperability between solutions and a clearer view of an IT infrastructure.

In 2015, the healthcare ERP market grew less than two-percent while investment in other technology grew more rapidly. As a result, the advanced technology being implemented across many healthcare organizations was not able to provide the desired results do to lack of interoperability between solutions.

"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 Doug Brown, Managing Partner of Black Book. "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."

As 2016 draws to a close, the survey reported a sharp increase in ERP interest across the healthcare industry because of compounding value-based risk decisions faced by executives.

Many organizations with ERP systems found that their legacy ERP systems had to defer maintenance or delay upgrades over the past three years, causing them to not get the fullest potential out of other IT infrastructure solutions.

Because of recent value-based care initiatives in healthcare, ERP solutions have made their way back into the health IT infrastructure to assist organizations in understanding the true cost of more recent technological implementations.

"In a payment environment that reimburses for value, it has become more critical to understand exactly how much it costs to deliver patient care," said Brown. "Clumsy costing based on uncoordinated data will become perilous for hospitals at risk."

The rate of ERP solution adoption was generally affected by a lack of understanding of the impact or complexity C-level executives had of their supply chain until value-based care came into the picture, the research found. Value-based care emphasizes accountability to measure cost against outcome, which makes an ERP system important for measuring the effectiveness and value of the many IT solutions organizations may have implemented.

Cloud ERP solutions were rated highly by survey respondents because of their speed and scalability. Aa healthcare organizations migrate to cloud solutions, cloud-based ERPs integrate better with newer infrastructure architecture.

"92 percent of survey respondents recognize that the ERP of healthcare future is mobile and it's in the cloud with secure networking and analytics built in", said Brown. "The idea is that you have general ledger, accounts payable, budgeting, forecasting and cash management all accessible anywhere, whether in the operating room, purchasing, or in administration."

Generally, healthcare organizations looking to make improvements to their health IT infrastructure are seeking better network visibility. As the need for visibility continues, organizations are beginning to reconsider ERP systems as their technology begins to reflect the technological advancement made by other IT infrastructure technology.

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