Healthcare is arguably the most challenging industry in which to operate. Even if they weren’t faced with life-and-death situations daily, healthcare organizations would still need to coordinate highly complex operations across diverse functions and departments, governed by strict regulations and tight budgets. A recent report from the Center for Healthcare Quality and Payment Reform maintains that 300 rural US hospitals are at risk of immediate closure due to financial challenges.
One way healthcare organizations can ease this operational burden is to implement an enterprise resource planning (ERP) system. These systems consolidate data pertaining to multiple functions, including finance, human resources, and inventory management, into one comprehensive solution, helping healthcare providers derive better insights and maintain accurate records. They also help automate key processes.
Selecting the right ERP system takes careful planning. This article outlines how healthcare companies can evaluate these systems to ensure that they deliver on their tremendous promise and empower health organizations to meet their specific business and care goals.
What Is ERP?
An ERP system is a software suite that integrates various business processes and the underlying data into a single platform. It allows companies to manage and automate core functions, such as finance, HR, and supply chain. In healthcare, ERP systems streamline operations and improve data accuracy by providing a centralized source of truth for all organizational data so healthcare providers can deliver high-quality patient care while also maintaining peak operational efficiency and regulatory compliance.
Key Takeaways
- Healthcare companies typically have highly complex operations that require precise coordination across diverse functions and departments, governed by strict regulatory constraints and tight budgets.
- ERP systems centralize healthcare data and improve coordination and communication across departments, resulting in deeper insights into operations and improved patient outcomes.
- Key steps in selecting an ERP system in healthcare include defining requirements, gathering stakeholder input, assessing vendors’ reputation and experience, conducting demos, talking with other customers, negotiating contracts, and ensuring post-implementation support.
Why Is ERP Important to Healthcare?
Few industries are as complex and multifaceted as healthcare. Not only is the industry highly regulated, but healthcare companies must also manage large volumes of extremely sensitive patient data. It’s a scenario tailor-made for ERP systems, which centralize all that data and improve coordination and communication across departments. With accurate and up-to-date information always available to healthcare providers, one important result is improved patient care.
How does ERP improve patient care? For starters, a single, integrated management platform creates operational efficiencies. By automating routine tasks and streamlining workflows, ERP systems free up staff to focus more on patient care and less on administrative tasks. A unified system also connects siloed functions to improve overall collaboration. For example, integration between finance and inventory systems can help ensure that critical supplies are always on hand. In addition, reduced waste means reduced costs.
Additionally, ERP systems offer critical real-time data analytics to provide healthcare organizations with important insights into patient outcomes and operational performance. Better insights fuel informed decisions about everything from scheduling doctors and nurses to improving overall service quality. Analytics and reporting are also the backbone of compliance with regulations, such as the Health Insurance Portability and Accountability Act (HIPAA), that help keep patient data secure.
What Are the Steps for Selecting a Healthcare ERP System?
Exhaustive planning is key to determining which ERP system best suits any organization’s needs. Consider the following 12-step evaluation process, which doesn’t end when the system launches.
- Define requirements and objectives: Given the inherent
complexities
of
the healthcare industry, clearly understanding organizational needs and goals for an
ERP
system is a critical first step. It starts with mapping out current processes and
identifying any inefficiencies or gaps. For example, a hospital might need an ERP
system
that integrates patient management with billing and inventory control to simplify
operations. This will require input from stakeholders across the organization (more
on
this
in step 2).
Define metrics for success, such as reduced patient wait times or greater inventory accuracy. An ERP system must be able to grow with the business, so look for systems that can scale easily. Cloud-based ERP systems scale better than on-premises ones because they don’t require the purchase of additional hardware or software; organizations just need to procure more computing power and storage capacity, which can be added in minutes. And don’t forget to focus on user-friendliness and training requirements to ensure smooth implementation and adoption. - Gather stakeholder input: In a healthcare environment, every
team—from
patient care to IT—relies on specific ERP features and capabilities to support its
unique
tasks and processes. For example, the patient care team might need functionalities
for
managing patient records, scheduling appointments, and tracking treatments. IT might
prioritize features for system maintenance, data security, and network management.
Involving
each of these stakeholder teams early in the ERP selection process is essential
br>
Start by identifying key stakeholders across various departments—clinical staff, administrative teams, finance, IT, and even patients, if appropriate. Conduct interviews, surveys, and workshops to gather their insights and expectations, and identify specific pain points and wish lists. For example, stakeholder input can help flesh out potential issues with integration between patient record and billing systems that could lead to delays and errors. And remember: Gathering stakeholder input should be continual. Involve stakeholders throughout the selection and implementation phases to fine tune requirements and adapt to any new challenges that arise. - Research ERP solutions and vendors: Researching solutions and
vendors
is
vital. That’s because the right ERP system must integrate myriad functions,
including
patient records, billing, scheduling, inventory management, HR, and financial
management,
as well as comply with stringent regulations. Look for vendors with proven
experience in
the
healthcare sector with functions such as patient management, billing, and
compliance.
Review vendor reputations, analyze case studies, and get recommendations from peers in the industry (more on this in the next section). Industry conferences and webinars are other great ways to learn about the latest ERP system innovations and get firsthand insights from peers in other organizations. In addition, request vendor demos, involving IT and clinical teams to get their perspectives on usability and key features. Also, consider each vendor’s post-implementation support and training services, which are indispensable for a smooth transition and long-term success. - Assess vendor reputation and experience: Healthcare is a
high-stakes
business. Patient safety, data security, and regulatory compliance all hinge on the
reliability of ERP systems, which is why it’s essential to find a vendor with a
solid
track
record in meeting those requirements.
Read case studies and product reviews and seek out client testimonials. Pay particular attention to how each ERP system vendor on the shortlist handles data security and regulatory compliance, as well as their ability to integrate with EHRs, laboratory information systems (LISs), patient management software, and other systems.
Healthcare organizations should also look for experience that matches their specific circumstances. For example, a hospital should assess a vendor’s experience in implementing solutions at other hospitals of similar size and complexity. - Consider integration capabilities: A healthcare ERP system needs
to
integrate smoothly with other critical
systems,
including EHR, LIS, and patient management software. Having a seamless data flow
across
systems is vital for consistent, accessible, and secure patient data. The first step
in
this
process is to identify the key systems the ERP solution will need to integrate with
and
assess its compatibility with them.
Look for ERP systems that offer application programming interfaces and support industry standards for data exchange, such as Health Level Seven, Fast Healthcare Interoperability Resources, and Digital Imaging and Communications in Medicine. Involve IT teams early in the process to evaluate the technical feasibility and potential challenges, as well as identify any custom integration needs. - Evaluate regulatory compliance: When evaluating ERP systems,
companies
must understand the specific regulations their organizations must meet so that they
can
identify solutions that have built-in compliance features and appropriate data
security
protocols. For example, a hospital evaluating an ERP system should verify that it
supports
HIPAA compliance by ensuring secure handling and storage of patient health
information.
The
system should also offer easy access to compliance reports and logs to streamline
audits
and
inspections.
Overall, look for ERP systems that offer audit trails, data encryption, and access controls. In addition, consult with legal and compliance experts during the evaluation process to identify potential compliance gaps and verify that the ERP system aligns with current and future regulatory requirements. - Conduct demos and proofs of concept: In an industry where patient
data
management, regulatory compliance, and integration with other key systems is
critical,
seeing a demonstration of an ERP system’s capabilities firsthand is invaluable.
Demos should be conducted with a shortlist of vendors. They should be tailored to specific use cases and include all key stakeholders, with a particular emphasis on features such as data security, user interface, integration, and compliance. Be sure to ask the vendor to walk through scenarios that mirror typical daily operations. For example, a hospital might request a demo showing how the ERP system handles patient intake, billing, and inventory management. Demos should be followed by a PoC, essentially a way for healthcare organizations to further test the system in a controlled, real-world environment. This will provide a clearer picture of how the system will perform and integrate with existing systems. - Perform cost-benefit analysis: A cost-benefit
analysis
helps organizations understand the financial impact and potential return on the ERP
system
investment.
Start by identifying all potential costs associated with the ERP implementation, including software licensing, subscription fees, hardware upgrades, training, and ongoing maintenance. Next, project possible benefits, which could include lower costs from improved operational efficiency, fewer errors, and better patient outcomes. For example, a hospital might weigh the costs of implementing an ERP system against the expected savings from streamlined billing processes and lower administrative overhead. Remember to consider both tangible and intangible benefits. Tangible benefits include cost savings and productivity gains; intangible benefits include improved employee satisfaction and better compliance with regulations. - Negotiate contracts and SLAs: With a rigorously negotiated
service
level
agreement (SLA), both the healthcare organization and the ERP vendor are on the same
page
when it comes to expectations, responsibilities, and deliverables.
Defining needs and expectations for the ERP system should focus on system uptime, data security measures, and support response times. For example, a hospital might negotiate an SLA that guarantees 99.9% ERP system uptime and support response times within 5 minutes to minimize disruptions to patient care. The contract should also clearly outline penalties for noncompliance. Legal and procurement teams should be involved early in the process to identify potential pitfalls. In addition, be sure to include provisions in the contract for ongoing training and support as new features are added and regulations change. - Plan for implementation: The first step is to create a detailed
project
timeline that outlines each phase of the implementation process, including system
configuration, data migration, testing, training, and go-live support. A hospital
might
schedule the ERP
implementation
in
phases, beginning with noncritical departments such as administration and
then
gradually moving to patient care units. A phased approach minimizes disruptions and
allows
for adjustments to be made along the way.
Assign a dedicated project manager to oversee the implementation and coordinate efforts among departments. Also involve end users early in and throughout the process—their feedback can pinpoint potential roadblocks before they become major problems. Additionally, plan for extensive training sessions so all staff members will be comfortable using the new system. - Execute implementation and go-live: ERP implementation and
go-live
mark
the transition from planning to actual use. Any issues in this step can impact daily
operations and patient care, so careful planning is required to minimize
disruptions. As
mentioned above, consider a phased approach to implementation. Finalize the
implementation
plan by testing every module and integration point to identify and address hiccups
before
the system goes live. At this stage, training sessions for all users should be
completed
so
that everyone is familiar with the new processes and tools.
When the system launches, have a dedicated support team on standby to handle any immediate issues. Regularly monitor the ERP system’s performance and gather feedback from users to make necessary adjustments (more on that below). Most important, don’t forget to communicate clearly with all stakeholders about the go-live schedule and what to expect. This helps manage expectations and reduces staff anxiety. - Post-implementation support and optimization: This important
phase
increases the likelihood that the ERP system will continue to run smoothly, adapt to
changing needs, and deliver on expectations. Establish a dedicated support team to
resolve
bugs quickly and conduct regular system audits to identify areas for improvement.
For
example, a hospital might schedule quarterly reviews to assess the ERP system’s
performance,
gather user feedback, and implement necessary updates. This step is particularly
helpful
for
maintaining compliance with healthcare regulations and sustaining operational
efficiency.
Continuous training programs are also important to keep staff updated on new features and best practices. In addition, organizations should establish a clear feedback loop between users and the support team and encourage staff to report any problems or suggestions for improvement. Don’t just gather feedback; use it to continually refine the system.
Reduce Complexity, Lower Costs and Improve Visibility With NetSuite
NetSuite’s cloud-based ERP solution centralizes all business processes, including finance, HR, and supply chain management, into a single system. The result is deep visibility into functions across departments, fueling better decision-making and simpler, more efficient operations.
NetSuite’s ERP solution is designed with healthcare organizations in mind. For example, its financial management module helps streamline billing and compliance with healthcare regulations. And its inventory management system reduces waste and helps ensure timely patient care by always making sure medical supplies are available. Because it’s cloud-based, NetSuite ERP offers the scalability and data security healthcare organizations need. The cloud also makes for a more cost-effective solution, with lower up-front costs and reduced IT overhead.
Selecting the right ERP system is a major decision for any healthcare organization. Patient care processes, regulatory compliance requirements, and integration with existing systems can be specific to each organization. By focusing on the steps outlined in this article, healthcare organizations can find an ERP solution that enhances efficiency, protects sensitive data, and helps improve patient outcomes.
#1 Cloud ERP
Software
How to Choose the Right ERP for Healthcare FAQs
How should an ERP system be chosen?
Choosing an enterprise resource planning (ERP) system starts with defining specific needs and objectives. Organizations should research and evaluate vendors with experience in their specific industry. Conducting demos and proofs of concept with vendors can help gauge the system in action. Gather feedback from key stakeholders in the process. Perform a cost-benefit analysis to evaluate the system’s return on investment and long-term value.
How do I choose an ERP system provider?
When choosing an ERP provider, assess its experience and reputation in your industry, ensuring that it has a track record of successful implementations. Evaluate its customer support and training services. Check for scalability and flexibility in its offerings. Seek feedback from current clients to gauge their satisfaction and the provider’s reliability.
What are the main three factors in choosing an ERP system?
Every organization will likely prioritize a different set of factors when choosing an ERP system. Three of the most important factors to consider are capabilities, integration, and cost.