Real-World Benefits of Real-Time Health Care Materials Management
Internet technology has revolutionized the ability of health care organizations
to cut operating costs and improve performance through real-time materials management.
Using this technology, optimizing materials management systems has become a high
priority project for many health care providers. Returns include reduced costs,
lower par inventories, better materials availability, less time spent by clinical
staff on administrative tasks, and a corresponding improvement in the quality
of patient care.
Summary
Health care operating costs are rising. Successful migration to the cost benefits of optimized materials management requires asking some detailed questions:
- Does your organization use consistent business processes for materials management?
- Are your processes automated or do they rely on manual methods and paper
passing?
- Do you maintain and support a variety of systems that communicate through
complex interfaces?
- Can you view procurement information in real time?
- Are immediate and accurate snapshots of your inventory available by department?
- Do you spend more time consolidating information than analyzing results?
Automating business processes using pure Internet software and architecture has proven to reduce operating costs and create performance improvements. Not since the advent of the spreadsheet has there been such a dramatic technology advance. Now you can more effectively procure materials, reduce inventory par levels, achieve real-time visibility for better decisions, and lower operating costs.
To realize these benefits, you must begin the journey to building your real-time health care enterprise. This journey begins with enhancing business processes by putting them online in real time. Internet architecture is the foundation for Web browser access with no code on the client. Transactions, processes, and reporting become integrated with online technology. Then you can establish a single point of access, consolidate back-office systems, reduce IT costs, automate manual processes, optimize inventory levels, and boost performance.
How do you get there? Establish consistent business processes across your enterprise. Aggregate your data by consolidating your systems. Integrate human resources, financials, materials management, and services-procurement systems. Choose Internet architecture as the foundation to enable Web browser access and open integration. Deploy software applications to match the key business processes across your health care enterprise.
The results are proven. These flexible yet consistent business processes can more closely align your software architecture with your management model for streamlined performance. You will get centralized control and standardization with better insight. Internet architecture will reduce costs and enable unprecedented convenience. Real-time visibility will strengthen your negotiating positions. Harmonizing your systems and deploying your best practices will dramatically improve your operations. The real-world examples of success are out there.
Proven Cost-Management Results
Cost-containment pressure is nothing new to health care finance professionals. Neither are superior results from cost-reduction programs. Health care organizations must minimize costs throughout their operations to improve margins. Materials management optimization holds the key to unlocking improved performance and dramatic cost reductions. Optimization means getting the right medical supplies and services at the right price, at the right time, to the right place.
The 1996 Efficient Healthcare Consumer Response (EHCR) was the first industry-led group to examine the supply chain from manufacture to patient delivery. That study identified $11 billion of waste in the health care supply chain. Six years later, the identification of waste in the supply chain and the quantification of savings potential for providers remains a huge focus area, evidenced most recently by two industry reports developed by Andersen1 and Cap Gemini Ernst & Young.2 The Andersen report, issued in 2001, takes the findings of the EHCR a step further, and identifies the savings available to each stakeholder in the supply chain. The Cap Gemini Ernst & Young report, also issued in 2001, outlines areas of hidden cost in the supply chain and expected results from the future state made possible by current solutions and best practices.
But how do you start? You need to address the systems that monitor your procurement and management of supplies, capital assets, and patient care items. Automating supply chain processes means spending less time on administration and more time on sourcing, negotiating, and forging alliances.
Health care organizations are hard at work today wringing costs from operations. A new generation of software features and Internet technology can improve your ability to consolidate purchases, simplify the ordering process, and reduce item handling.
- Group purchasing contract management enables you to take full advantage
of group purchasing organization (GPO) contracts.
- Universal product number (UPN) support simplifies invoice and receipt matching.
- Online access provides history of supplies and services purchases.
- Materials usage and reconciliation tracks the supplies used by patients.
- Commitment control accounting automatically generates an alert when spending meets predetermined limits.
Consistent Online Business Processes
Throughout the 1990s, the reality of enterprise resource-planning applications in health care was nothing more than a group of disparate best-of-breed applications with few linkages, operating the general accounting, human resources, and materials management departments. In this environment, there was little interaction between applications, with each managed by individual departments, leaving the data in silos.
Management information was limited in scope and availability. Many business decisions were made without timely information. Health care organizations could not continue to operate effectively without marrying this information and streamlining processes, thus enabling them to operate in a more coordinated manner.
Pure Internet applications have brought a new way to deliver data into a comprehensive view of operational information in real time. The operational benefits of these changes have been transformational, improving financial visibility, streamlining supply chain processes, minimizing human resource processes and overhead, while providing a clearer picture of the organization's overall financial health. Department managers now have access to timely financial and operational information within days of month-end, enabling management to address changing business needs in real time, not weeks or months after the fact.
The Internet and browser applications are powering this move to a real-time health care enterprise. Enabling all departments and stakeholders to have anytime, anywhere access is fast becoming the standard. By spreading the access across the organization, you gain efficiencies. By allowing remote locations to take full advantage of buying agreements instead of purchasing through local suppliers, health care organizations can eliminate or minimize administrative tasks and focus clinicians on clinical activities.
Real-Time Advantages
Real-time materials management can improve both the financial health and the level of care in your health care organization. Using management tools and reporting capabilities to streamline operations will relieve many administrative burdens, provide substantial cost savings, and enable your clinical workers to spend less time on materials and more time with patients.
Establish Consistent Processes
Automate the procure-to-pay process — from sourcing to requisition to payment of supplies, services, and temporary workers.
- Connect physicians, patients, suppliers, partners, and employees directly
to processes.
- Reduce costs for supplies and services with better usage forecasting and
buy management.
- Reduce requisition and purchase-order processing times.
- Enable more suppliers to submit invoices electronically.
- Simplify and streamline the inventory-management process.
Access Real-Time Information
Gather business intelligence for more reliable supply utilization, reporting, and financial information.
- Access information immediately anywhere, anytime, on a Web browser.
- Get better information for strategic planning and contract negotiation.
- Use performance indicators to manage revenue, costs, and profits.
Integrate Systems
Enable consistent integration with financial, human resources, and clinical systems.
- Leverage point-of-use medical supply cabinets and surgical services information
systems.
- Connect finance and human resources information to drive end-to-end business
processes.
- Link to online trading exchanges and virtual medical supply marketplaces.
Replace Redundant Manual Data Collection
Automate your data collection processes and increase accuracy.
- Reduce internal resource requirements for system infrastructure and data
collection.
- Realize faster and more accurate data capture.
- Eliminate rework associated with errors and credits.
- Generate savings throughout the supply chain.
Centralize Contract Administration
Enables centralized contract repository and maximizes the benefits of your GPO contracts, rebates, and incentive programs.
- Standardize pricing and simplify contract terms.
- Establish a single point of pricing maintenance and management.
- Generate comprehensive supplier performance statistics.
- Assure alignment of pricing, rebates, and units of measure.
- Maximize contract utilization.
Streamline Handling Processes
Use UPN and bar code technology to streamline materials-handling processes, including receiving, inventory, and invoice management.
- Enhance the procurement and inventory management processes with UPN.
- Accelerate mobile record keeping with bar code technology.
Internet Architecture
Internet technology enables a new health care model to dramatically improve performance and reduce costs.
Browser Access and Open Integration
Internet architecture extends your enterprise systems to the Web browser with HTML applications that connect customers, suppliers, and employees. Use this open integration foundation with XML and Web services to connect systems, processes, and people for increased productivity, reduced costs, and improved profitability.
Portal Interface
Many leading health care organizations are using a portal interface, delivered on a Web browser, to create a central point of secure, role-based access to both clinical and nonclinical systems. Clinical staff and administrators access information without the limitations of time and place.
Mobile PDA Integration
Pure Internet architecture integrates with mobile devices such as PDAs to reduce the need for data entry, to increase accuracy, and to accelerate order management and inventory processes at the point of use.
Health care organizations are using Internet technology today to connect patients, physicians, suppliers, and administrative employees to automated business processes — anytime, anywhere.
