Among healthcare organizations’ many challenges are allocating resources amid unpredictable demand, managing complex reimbursement workflows, and—lest we forget—providing the highest-quality patient care. Enterprise resource planning (ERP) systems can help providers achieve all of the above and, as you’re about to read, many more benefits.

What Is ERP?

ERP is a type of software that companies use to manage, integrate, and automate their core business functions, including financials, human resources, supply chain, inventory, marketing, and customer service. Its key value proposition is the centralization of data from previously siloed systems, so that all stakeholders are working with the same detailed information to inform their decision-making. This organizationwide visibility also helps leaders and managers identify inefficient processes, spot trends, develop accurate forecasts, recognize opportunities for growth, and reduce costs through automation and efficiency gains.

Why Is ERP Important in Healthcare?

An ERP system helps healthcare companies—including hospitals, clinics, medical practices, and laboratories—improve patient care while reducing their costs. By unifying data from electronic health record (EHR) systems and other sources of patient information with financial and operational data, ERP applications can help care providers streamline operations; automate time-consuming, error-prone, and often redundant processes; and aid in regulatory compliance. All of the above can lower operational costs so that healthcare providers can focus on their primary mission of delivering top-notch patient care.

For instance, by analyzing patient flow and resource utilization, an ERP system can pinpoint bottlenecks in the patient admissions process so that they can adjust staff levels or modify procedures.

And because ERP systems provide real-time visibility into financial data and related key performance indicators (KPIs), healthcare organizations can take a more dynamic approach to budgeting, financial management, and resource allocation to accommodate fluctuations in the cost of labor, supplies, and medications. ERP systems also facilitate a smoother billing cycle and insurance claims process, reducing the time between service delivery and payment and helping to maintain a steady cash flow.

Key Takeaways

  • ERP systems help healthcare providers balance the need to improve patient care against the need to contain their costs.
  • An ERP system integrates clinical, operational, and financial data across a healthcare organization into a centralized platform for organization wide visibility.
  • Benefits of ERP systems include the ability to streamline processes, lower operational costs, and comply with regulations.

15 Benefits of ERP in Healthcare

The market for ERP systems in healthcare is projected to reach $2.54 billion by the end of 2027, according to Constellation Research, underscoring the value that these systems bring to an industry where patient outcomes are, in part, dependent on how well the business runs. The following are 15 key benefits these systems offer the industry.

1. Provides data visibility and analytics: One of ERP’s biggest benefits is that it integrates data from traditionally disparate sources within one platform, so that everyone from across the business is working with the same information. These sources can include EHR systems; administrative applications, such as appointment scheduling and billing; systems containing medical claims and prescription data; remote monitoring devices used in the hospital and at home; and financial management, HR, marketing, and customer support systems.

Naturally, all of this consolidated data lends itself to analysis. Through use of advanced analytics tools and AI, healthcare organizations can gain important insights into patient demand, staffing needs, financial performance, required inventory levels, and so much more. KPIs, such as average length of hospital stay, staff-to-patient ratio, and claim-denial rate, not only help identify areas in need of operational improvements, but they can also lead to better, more proactive care.

2. Streamlines operations: Many of healthcare’s core challenges are rooted in inefficiencies caused by manual workflows, disconnected processes, and lack of communication among various departments. By automating and linking workflows, ERP systems streamline operations and reduce the burden of many time-consuming, error-prone administrative tasks, such as data entry, billing, and coding. At the end of a doctor’s visit, for example, an ERP system can automatically notify the patient’s pharmacy to prepare a medication and prompt the billing department to process an insurance claim, minimizing the need for multiple phone calls or emails.

3. Enhances patient care: Obtaining a fully longitudinal view of a patient’s medical history in a timely manner can be challenging if healthcare providers have to go hunting for data stored in siloed clinical applications and then piece everything together. Without complete information, the accuracy of diagnostic and treatment decisions could be at risk.

ERP systems are designed to make data available in a single database. Cloud-based ERP systems offer the additional benefit of accessibility from anywhere, enabling clinical staff in different locations to collaborate on cases to further advance patient care.

4. Facilitates easier medical records access: A practitioner’s ability to quickly access a patient’s information during a medical appointment not only improves the patient experience, but it is also valuable beforehand, such as when a patient calls to discuss a medical issue. In addition, when call center staffers have medical history, insurance coverage, and other patient information on hand, they can better direct callers to needed services. This accessibility is also helpful for telehealth providers that have lacked access to all necessary patient records when providing services.

5. Improves financial management: Healthcare financial management requires balancing the four C’s of costs, cash, capital, and control over how funds are spent—much of which is dictated by state and federal regulations. Organizations must also account for industry nuances that include a need for price transparency, complex reimbursement workflows, and the difficulty of forecasting cash flow.

An ERP system handles a healthcare organization’s many back-end financial functions, including billing and invoicing, budgeting, planning and forecasting, claims management, and expense management. The automation of these processes not only saves time and minimizes errors, but the resulting analysis also helps providers better respond to internal challenges, such as a poorly performing business unit, and external pressures, such as price inflation or regulatory changes.

6. Lowers operational costs: Tight operational margins are a reality for many healthcare providers. The top reasons include rising labor costs, lower reimbursements from payers, and rising supply costs, according to 135 CFOs surveyed by the Healthcare Financial Management Association. ERP systems can help lower costs by centralizing, automating, and streamlining a wide range of scheduling, inventory management, and other routine processes.

7. Reduces errors: Errors in healthcare often stem from manual workflows that require duplicative data entry in patient charts or spreadsheets. They can also result from incomplete information at the point of care or other places where important decisions need to be made but are inhibited due to siloed systems.

ERP systems synthesize data from disparate business systems, as well as streamline and automate myriad healthcare provider processes. This combination of process automation and access to previously unavailable data can significantly reduce the chance for human error.

8. Helps ensure regulatory compliance: Complying with government regulations and industry standards requires workflows that are both transparent and traceable. Rather than staff having to search for data in separate systems to complete compliance documentation or respond to an audit—both resource-intensive and time-consuming tasks—an ERP system can quickly generate the required up-to-date documentation. Leading ERP systems go a step further by automating the reporting process, pulling the necessary information and populating it into the right reports, in the correct formats, for different regulatory bodies.

9. Offers more scalability and flexibility: With cloud-based ERP systems, healthcare providers can add seats, boost capacity, and turn on new features as the needs of the organization grow—much more easily than with on-premises systems.

10. Enables interoperability: A lack of interoperability among siloed and/or manual workflows is a key contributor to inefficiencies in healthcare. ERP systems facilitate the exchange of data among previously distinct administrative, clinical, financial, and operational systems. ERP systems also help organizations establish a framework that supports process reengineering and greater standardization of clinical workflows and business processes.

11. Increases data security: The total number of data breaches in healthcare has more than doubled in the past decade, as cyberattackers seek to steal sensitive medical and financial information. The urgency to protect this data is high, in part because each breach costs a healthcare provider, on average, more than $10 million. Another costly consequence, though one without a direct price tag, is the loss of patient trust and reputational damage.

ERP systems provide important cybersecurity benefits. The consolidation of information onto a single platform significantly reduces the need for data transfers that can be intercepted by hackers. In addition, leading cloud-based ERP systems provide robust security methods for that centralized repository, including strict access controls, threat monitoring, multifactor authentication, and data encryption.

12. Automates payments: For just a single episode of care, a healthcare provider will have to submit bills to multiple entities, including patients, private insurers, and government agencies. Manual billing processes are time-consuming and error-prone; denials or other delays in receiving payment hit healthcare organizations squarely on the bottom line.

ERP systems automate accounts payable workflows—from invoice generation to claims submission to payment processing—which paves the way for more timely payments and reimbursements and helps ensure that submissions meet regulatory guidelines. Operationally, organizations also benefit from a holistic view of the payment process, allowing them to more readily identify further opportunities to automate processes, capture revenue, or facilitate payment.

13. Manages inventory better: The typical health system manages a complex matrix of medical goods suppliers—for everything from tongue depressors to implantable medical devices—along with the typical office supplies one would expect of a modern business. Orders must be accurate and placed in a timely manner. Once they arrive, they need to be distributed to the right facility and then tracked.

ERP systems monitor stock levels to determine what items are needed and where, which reduces the costs and impact on patient care associated with under- or overstocking. The integration of barcodes or radio frequency identification tags to facilitate tracking is especially valuable for items such as medications and vaccines that require refrigeration upon arrival, reducing the unrecoverable cost of throwing away items that spoil or expire.

14. Supports resource allocation: By automating operational processes related to inventory management (mentioned above), staff scheduling, and patient flow, ERP platforms can help ensure proper resource distribution and reallocate as necessary. For example, an ERP system can monitor and forecast trends in patient demand, such as hospital admissions, outpatient appointments, or emergency department wait times. With this information, health system leaders can arrange staff schedules to meet demand, without the costly side effects of under- or overstaffing.

15. Improves decision-making: With access to real-time, unified data and analytics, healthcare staffers at every level gain the insight they need to make better informed decisions, allocate resources more efficiently, and improve patient care strategies. ERP systems coupled with AI can uncover trends and issues that might otherwise remain undetected, leading to better patient outcomes, reduced operational costs, and increased overall efficiency. For example, if a hospital system sees that one internal pharmacy is receiving more appointments for flu vaccinations than others, it can allocate additional staff to that pharmacy. Similarly, supply chain managers who receive alerts from the ERP system about changing preferences among clinical staff for medical supplies can tweak scheduled orders.

benefits erp healthcare
By centralizing healthcare and operational information, an ERP system helps ensure that all people across the organization—doctors, nurses, administrative staff, executives, and managers—are equipped with the most accurate data to perform their jobs.

Choosing the Right ERP for Your Healthcare Business

As with any investment in enterprise software, healthcare organizations need to weigh their options carefully when evaluating ERP vendors. First and foremost is identifying the most critical goals for an ERP system, whether it’s streamlined billing, better access to medical records, improved inventory management, or another priority.

While every organization has its own needs, some common questions to ask vendors include:

  • Is the ERP system designed for healthcare, with functionality that includes support for clinical workflows, inventory control, compliance reporting, and budgeting and forecasting?
  • Does the ERP system integrate with key healthcare systems, such as EHR, practice management, and billing systems?
  • Does the vendor offer advanced security features and compliance tools that protect sensitive patient information, in accordance with HIPAA regulations and industry standards?
  • Does the vendor offer access to add-on modules and provide regular software updates?
  • How will the vendor migrate data from legacy systems to the new ERP system?
  • Will the vendor help create milestones and KPIs, including but not limited to ideal patient-to-staff ratio and those that target operating cash flow?

Healthcare organizations should also note how the up-front and ongoing costs of ERP system implementation can vary, depending on how the system is deployed. An on-premises ERP system typically comes with a one-time license fee, significant initial hardware costs, and annual fees for upgrades and maintenance. Cloud-based ERP systems, on the other hand, come with a monthly subscription fee, plus additional fees for modules that add functionality beyond the standard system offering. Both deployment types have costs associated with training, change management, and implementation, though an on-premises deployment often incurs additional costs due to the need for integrations and other custom builds.

Once an ERP vendor has been selected, it’s time for the healthcare provider to define the scope of implementation; build a project team and develop a project plan; test and deploy the new system; and provide ongoing maintenance. Organizations may need to outsource part (or all) of the implementation to a third party that has significant experience working with the new ERP vendor.

Improve Your Medical Practice with NetSuite

NetSuite ERP’s integrated suite of applications seamlessly integrates financial management, inventory control, and HR modules to drive data-driven decisions, improve workflow efficiency, and help healthcare providers deliver higher-quality care.

This integration reduces data silos and fosters collaboration and information sharing across departments. One important benefit of NetSuite ERP is its ability to automate routine tasks, freeing up clinicians and other professionals to focus more on patient care. NetSuite’s cloud-based architecture is highly scalable and flexible, so healthcare organizations can adapt to changing needs without significant disruptions. Built-in features help healthcare providers prioritize data security and patient privacy to stay aligned with regulations.

ERP gives healthcare organizations a centralized, longitudinal view of data that has traditionally remained in siloed systems. Leading ERP systems go a step further, adding layers of AI, automation, and decision support to help healthcare stakeholders make evidence-based decisions that reduce costs, improve care, and help the organization thrive.

Benefits of ERP in Healthcare FAQs

What is the primary benefit of an ERP system?

By integrating data from previously siloed business systems, an ERP system improves decision-making across the organization. In healthcare, that can lead to better patient outcomes.

What are 5 benefits of ERP?

Key benefits of implementing an ERP system in healthcare include better management of health system finances, easier access to medical records and other key information for authorized users, more efficient allocation of labor and resources, fewer errors associated with manual data entry, and greater insight into operational performance.