E hospitals and the Benefits of Mobile Solutions

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1 WHITE PAPER Mobile Technology An Essential Component of the Next Generation Healthcare Supply Chain Executive Summary Brought on by economic pressures, healthcare reform and evolving business structures and practices, hospitals are pressed to identify and implement more efficient, coordinated processes. Supply chain, the second largest and fastest growing expense in healthcare organizations, is one substantial area of focus for reform. As hospital supply chains evolve, they require considerable tracking of complex movements throughout a diverse organization. Creating an inventory management infrastructure is key to addressing rapid growth, increasing complexity and disparate systems. Despite its widespread use in virtually all American hospitals, Enterprise Resource Planning (ERP) systems fail to meet the needs of today s customers. Hospitals continue to struggle with inventory issues and high expenses related to software price tags, start-up costs and labor. ERP system vendors are working to redesign their offerings in an effort to overcome lengthy and expensive development and implementation efforts, as well as poor ROI track records. Driving the next generation healthcare supply chain are cloud- and mobile-based technologies. When paired with existing ERP systems, these technologies provide organizations with the scalability, visibility and flexibility they need to effectively execute new business processes that deliver greater consistency. However, there are many challenges to consider when setting out on this path, including aggregating multiple ERPs, legacy system business process issues, traceable inventory disbursements, department-specific needs, and single-use devices mandated by certain inventory management systems. Despite the newness of mobile use in healthcare, users and administrators alike recognize its many benefits. Mobile apps are critical to clinching quality improvement measures as they provide a way for both practitioners and patients to gain vital information related to giving and receiving care. Mobile smart devices make it easier to see throughout the organization, and visibility into an entire healthcare delivery organization, specifically supply inventory and use, will likely be a requirement of the future. Equally important is the capability of capturing information wherever care is delivered, as meaningful data will become the cornerstone of solid business decisions. And, so long as Big Data plays a significant role in the future of healthcare, so too will data security be a critical deliverable. Provider organizations benefitting from mobile technology s fast implementation, ubiquitous data capture, low start-up cost, long-term affordability, and rapid user onboarding will quickly achieve the ROI they ve been looking for in an ERP system. Background Nearly every hospital in America has implemented an Enterprise Resource Planning (ERP) system, yet hospital staff members still report stock-outs, overstocking, waste (due to expiring supplies), and high labor expenses from manual processes and lower-than-expected savings from supply chain. 1

2 Fundamentally, ERP systems are designed to meet the planning and reporting needs of finance and human resource teams. While this legacy technology continues to promise supply chain savings, the results often don t materialize. ERP system vendors are working to redesign their offerings to meet the needs of today s customers. However hospitals are still wary, as ERP systems still have a lot to overcome including years of development, monthsor years-long implementation periods, high initial investment costs, ongoing fees, high consulting costs (during implementation and beyond), and a poor ROI track record. The answer may be in adding new cloud computing and mobile technology to an existing ERP. ERP Results Don t Meet Expectations ~59% of projects have exceeded their planned budgets 53% of projects have exceeded their planned durations 56% of organizations have received less than 50% of the measurable benefits they anticipated from their ERP software initiatives. SOURCE: Panorama Consulting Solutions 2014 ERP report [ Panorama-Consulting.com/resource-center/2014-erp-report/] In a recent review (2015 Top Ten Tech Trends), Gartner, Inc. determined the top trends most probable to significantly impact an organization over the next three years. On that list were both cloudbased technology and the proliferation of mobile devices. Gartner predicts, The convergence of cloud and mobile computing will continue to promote the growth of centrally coordinated applications that can be delivered to any device. David Cearley, vice president & Gartner fellow, affirms, Cloud is the new style of elastically scalable, self-service computing, and both internal applications and external applications will be built on this new style. While network and bandwidth costs may continue to favor apps that use the intelligence and storage of the client device effectively, coordination and management will be based in the cloud. 1 Gartner points out that the popularity of mobile devices results in an expanded computing environment that will transform where and how technology will be utilized. The firm suggests that there will be, An increased emphasis on serving the needs of the mobile user in diverse contexts and environments. Mr. Cearley predicts, It s the overall environment that will need to adapt to the requirements of the mobile user... this will continue to raise significant management challenges for IT organizations as they lose control of user endpoint devices. It will also require increased attention to user experience design. 1 With the context of expanding beyond the status quo for inventory management functionality, this paper will focus on the opportunities, challenges and benefits of using mobile-based technology to advance healthcare business processes. Overview The challenges hospitals face have grown significantly over the past decade, most notably, declining reimbursements, changing requirements for quality of care and patient outcomes, and new complexity within their organization s structure. Integrated Delivery Networks (IDNs) and other types of multi-layered provider organizations are growing and becoming more complex, spreading services across a collection of acute-care hospitals, subacute clinics, physician group practices, and even home-care providers. There is an accelerated push to identify more efficient, coordinated processes across these different care settings. The supply chain environment supporting these provider organizations is not exempt from the challenges posed by changing structures and requirements. Supply chain is known for being the second largest and fastest growing expense in healthcare organizations, second only to labor. The cost of supplies themselves make up a significant portion of this expense, generally estimated at 15-30% of the total, depending on the research source and whether pharmaceutical products and capital are included. With this associated high-level expense, there is a substantial opportunity to control cost by managing supplies more efficiently than ever before. 2

3 Setting Goals to Improve Inventory Management Goals to achieve hospital supply management should include: Create and implement an inventory management process that provides systemwide connectedness and visibility Match processes to department-specific supplies and care in order to increase nursing/ clinical staff satisfaction Eliminate stock-outs Scale down inventory (both on-hand and ongoing) to reduce overall cost Reduce labor associated with inventory management Eliminate off-contract spending and rush delivery charges Reduce waste from expiring product The Challenges Creating an inventory management infrastructure is key to addressing rapid growth, increasing complexity and disparate systems. To ensure success, organizations must first consider these challenges: 1) Aggregating multiple ERPs Multiple ERP systems often become part of a single organization as healthcare systems acquire hospitals and other care-providing organizations. Attempting to aggregate information across these systems is extremely difficult; migration to a single system can take many years to complete. In the short-term (the first 3-5 years of a newly consolidated organization), managing inventory is critical in order to gain system-wide efficiencies. 2) Legacy system issues (cost, control, time) Legacy systems, including ERP-based supply chain management modules and inventory cabinet systems have historically failed to deliver the results hospitals need. ERP systems frequently take long periods of time to implement, exact huge consulting fees, and take years to deliver ROI (due to high initial investments). Scot Peterson, editorial director of TechTarget s Business Applications and Architecture Media Group, recently asked, How can so many businesses launch initiatives that they can expect will, on average, have a 50% success rate that delivers 50% of expected outcomes? It seems ERP keeps stepping up to the plate and striking out. 2 This is evident in healthcare, as hospitals continue to experience business issues related to ERP systems, such as month implementation cycles and high consulting fees for completing implementation. In addition, hospital wrestle with typical inventory management problems such as stock-outs, overstocking, hoarding, maverick spending and waste due to expiring products. 3) Disbursement following delivery The delivery segment of the supply chain process works well, as hospitals have successfully worked with distributors and internal distribution centers to ensure timely receipt of the products they need. However, there are challenges related to the disbursement of supplies within the hospital and even throughout a large and loosely connected organization. Facilities struggle with managing receipt-to-storage of delivered supplies, as well as gaining visibility to supply storage locations. 4) Department-specific needs Most inventory management systems can only support one approach. Consequently, hospitals elect to use a single process throughout their entire organization, for example, using only locked-cabinets or PAR. However, selecting a process specific to the different areas of practice or care would better meet the needs of clinicians and patients. When processes don t fit, people find workarounds to bypass the system. Consider this example from a large medical center in Pennsylvania. Nurses in the busy emergency department were required to use a cabinet system, having to key in several sequences of information before gaining access to supplies in the cabinet. This cumbersome process created problems in the busy, fast-paced ED environment. As a result, nurses would grab multiple items at a time and hoard supplies unlocked on storage carts or hidden around the ED. 3

4 5) Single-Use Devices One of the barriers specific to mobile adoption has been single-use devices. Often these are heavy, bulky units used for scanning in specific systems or for a specific application. The difficulties are the required data entry, combined with the possibility that staff members could conceivably carry more than one unit with them throughout their rounds if they were performing multiple tasks. Why Go Mobile? Today s mobile technology affords numerous benefits. Though mobile use in healthcare is still in the early stages, it is rapidly gaining popularity, with users and administrators enjoying its convenience and recognizing its many other benefits. Multiple applications can reside on a single device. This means a clinician s device might have applications to help deliver patient care, update the patient record, check for drug interactions, forward aftercare instructions, and manage supply inventory such as remove supplies from inventory and return those not used, adding them back to on-hand inventory in a specific location. With mobile, users benefit from up-to-date applications. Instead of using years-old versions of software, mobile devices interacting with cloud-based applications are constantly updated with the latest software iterations from the vendor. Software vendors utilizing cloud technology continuously push updates throughout the year. Mobile delivers optimal visibility throughout an organization. When users are trained to manage all their tasks via their mobile device, broader visibility within a more connected supply chain is possible. With visibility throughout all supply locations, administrators can optimize inventory. The Aberdeen Group reports that the importance of supply chain visibility is rising. Increasing visibility is a critical strategy for enterprises aimed at reducing costs and improving operational performance in the context of their increasingly complex and multi-tiered global supply-demand networks. Visibility is a prerequisite to supply chain agility and responsiveness. But before a company can reduce inventory or landed cost, it needs visibility into them. Only then can it apply tools to agilely adapt to the information it collects. 3 Mobile is a highly efficient way to deliver technology. Mobile technology deployment is rapid, user adoption is immediate, and process efficiencies and ROI are realized quickly. The combination of cloud- and mobile-based technologies can eliminate much of the high, upfront costs associated with ERP or other traditional IT systems. Additionally, smart device operating system standards provide a consistent user interface across all applications, which makes training users quick and simple. Meaningful analytics result from improved data aggregation throughout the organization. With a robust infrastructure supporting a mobilebased system, data is constantly fed into smart reporting; supply chain leaders will benefit from a more accurate view of their entire organization s use of supplies. Mobile Technology in Healthcare The use of mobile applications in the delivery, tracking and reporting of patient care is growing exponentially. Mobile has completely revolutionized capturing information at the bedside. This foundation for data aggregation enables better understanding of treatment and patient outcomes. Capturing information wherever care is delivered not only improves billing accuracy, it also helps build understanding of the total episode of care, from the time the patient enters the system until their treatment is complete. Mobile apps also help with continuing clinician education, including up-to-the-minute clinical information dissemination, ongoing training, product introductions, best-practice sharing and 4

5 care protocols. Additionally, mobile apps (e.g., mhealth) are used by patients to help manage their health and diseases, engage with care teams during episodes of care, receive and understand aftercare instructions, and monitor ongoing health issues. Looking at the business-side of healthcare delivery, mobile technology is on the brink of revolutionizing the way the hospital enterprises are run. Utilizing mobile technologies allows organizations greater flexibility to design, implement and effectively execute new business processes that deliver greater consistency. Smart devices make it easier to see throughout the organization and with hospital systems growing in complexity and reach, that s become critical. In the future, visibility to an entire healthcare delivery organization, specifically supply inventory and use, will likely be a requirement. Supply chain practitioners must leverage inventory reporting tools that provide real-time velocity for every item used within an organization. Today s smart devices make staff adoption easier, standardize processes for more consistent usage, and afford greater visibility with more accurate reporting. The next link in the chain is that all this good data becomes the cornerstone of solid business decisions. The Next Generation Supply Chain is Data Driven Driving the next generation healthcare supply chain are cloud- and mobile-based technologies. As hospital supply chains evolve, they will require considerable tracking of complex movements throughout a diverse organization. In a recent article, Daniel Miller, Divisional Head, Finance, at Innovation Enterprise, examined the 7 Characteristics of the Next-Generation Supply Chain. 4 Following are a few highlights directly related to healthcare providers: 1) Data Driven Data needs to be collected from as many sources as possible to create wide ranging insight with a positive impact on the supply chain as a whole. This could be anything from tracking where a particular product is, to the speed of movement in certain areas. These insights will allow organizations to optimize their supply chain based on informed analysis rather than a gut feeling of what is quicker or more efficient. 2) Flexible Next generation supply chains will be agile operations that adapt to changing circumstances. This considers how things are delivered, and also how one reacts to problems within the supply chain, e.g., response to emergencies such as disease and natural disasters. These activities can be both unpredictable and devastating to supply chains; it is crucial to minimize any disruption. Employing the data collected and modeled, next generation supply chains will have the ability to act immediately and minimize disruption. 3) Proactive Next generation supply chains realize the importance of continuation of service regardless of conditions. Both internal and external customers (in this case, clinicians and patients) expect service at all times. Planning and modelling based on accurate data will make a difference. 4) Optimized Inventory On-hand inventory must meet demand without being excessive. Next generation supply chains must manage supplies more efficiently, while continuously monitoring stock levels. The potential for rapid changes in supply consumption is high and therefore, stock availability should be monitored in real time. The other characteristics examined included global, green and fast. 7 Characteristics of the Next-Generation Supply Chain 4 5

6 Is Data Captured by Mobile Devices Secure? One of the key benefits of mobile is the pervasive use of smart devices throughout the healthcare system. Continuous data capture and uploading to cloud-based storage is the foundation of the future, resulting in better analytics so IDNs and other healthcare delivery organizations can create more sustainable business models. With requirements in place to track more patient care and outcomes information, it s essential that data be safely stored and accessible for analysis. The future of healthcare hinges on Big Data and the future of Big Data hinges on data security. Security in cloud-based data storage continues to be enhanced. The recommendation today is for hospitals to ensure their vendors store data in highly secured environments. As the technology for data security evolves, hospitals should ensure their vendors use the most current and effective technology available. From a report published by IBM, The entire body of medical knowledge doubles every five years, and it creates more mobile data. As medical technology constantly improves and evolves, healthcare data storage needs will continue to grow. 5 This type of continual growth will drive ongoing improvements in cloud-based storage security. Conclusion Mobile technology delivers many advantages to healthcare delivery organizations, particularly in support of better business processes. With fast implementation, easy staff training and rapid adoption, pervasiveness of data capture, low start-up and ongoing costs, hospitals can quickly achieve ROI and additional savings using mobile devices. Provider organizations will benefit from improved data accuracy and better reporting, giving them the information needed to make smart decisions for the hospital business. References 1. Gartner Identifies the Top 10 Strategic Technology Trends for 2015 [news release]. Orlando, Fl: Gartner, Inc; October 8, Available at: Accessed: April 7, Petersen, S. ManufacturingERP. Cloud, mobile technologies ease ERP installation woes. Feb Available at: searchmanufacturingerp.techtarget.com/opinion/cloud-mobiletechnologies-ease-erp-installation-woes. Accessed: April 7, Heaney, B. Aberdeen Report Group Inc. Supply Chain Visibility: A Citical Strategy to Optimize Cost and Service. May Available at: Aberdeen_Report.pdf. Accessed: April 7, Miller, D. Innovation Enterprise, The 7 Characteristics of the Next Gen Supply Chain, Dec 10, Available at: theinnovationenterprise.com/articles/the-7-characteristics-of-thenext-gen-supply-chain. Accessed: April 7, Sage ERP Team. Healthcare providers can benefit from ERP. Available at: Apr 18, Accessed: April 7, Eagan Woods Drive, Suite 350, Eagan, MN Jump Technologies, Inc. All rights reserved.