How ERP Helps Streamline Hospital Operations & Reduce Costs

Hospitals are under constant pressure to deliver superior patient care while controlling rising operating costs in today's health care environment. Enterprise Resource Planning (ERP) systems have become a transformative mechanism to assist healthcare institutions with organizing their operations, maximizing the use of available human resources, and eliminating excess costs. Hospital ERP systems allow medical organizations to centralize many departments and processes into a single platform while transforming healthcare organizations’ operations.

Understanding ERP in the Healthcare Context

What is Hospital ERP?

Hospital ERP is a unified software system that encompasses all vital departments, including patient management, inventory, billing, human resources, pharmacy, and laboratory functions, in one software system with a single database. This approach eliminates data silos and redundancy within the healthcare organization while ensuring information flows seamlessly throughout the organization.

The Growing Need for ERP in Hospitals

As healthcare continues to increase in cost every year while patient expectations grow, hospitals need to implement technology that is efficient, effective, and does not compromise patient quality. The hospital ERP provides real-time visibility of hospital operations while supporting data-driven decisions and automating non-value-added tasks that were commonly performed by staff.

Process Automation: The Foundation of Efficiency

Automating Administrative Workflows

One of the most helpful features of the hospital ERP system is the automation of administrative tasks. The automation of the various administrative activities, such as patient registration, appointment scheduling, billing, and claims processing, etc., is likely to have a significant impact on the reduction of errors and processing time by as much as 60%. The medical professionals can then concentrate on and attend to the patients, which results in better service quality, increased patient satisfaction, etc.

Streamlining Clinical Documentation

The ERP system enables the automation of clinical documentation and ensures the integrity of records. The combination of the electronic health record (EHR) with the hospital ERP system allows the physicians and nurses to quickly access the patient history, update the treatment plan while the patient is being treated, and fulfill our compliance requirements. Ultimately, documents won’t get lost, and the continuity of care between departments is maintained.

Pharmacy and Laboratory Integration

The pharmacy management component of an ERP system enables pharmacies to process prescriptions efficiently, thereby improving accuracy and reducing medication errors, monitoring medication expiry dates, and beyond. Laboratory modules enable the automated processing of laboratory tests, including ordering, reviewing, and reporting test results and billing components, all while significantly improving processing times and diagnostic accuracy.

Optimizing Resource Allocation for Maximum Efficiency

Intelligent Staff Management

Hospital ERP systems offer a complex workforce management solution for optimizing staff scheduling by patient load and skill level. These systems utilize historical data and forecasting of patient admission trends/staff schedules to ensure the appropriate staffing is allocated during the busiest times, while guaranteeing staff are not over-allocated during quieter times, which can result in large labor cost savings. 

Equipment and Asset Tracking

Medical equipment represents a large financial investment hospitals take on. Labor management tools available in the hospital ERP system allow healthcare providers to easily know the location of needed equipment, schedule or monitor equipment upkeep, and track how often equipment is being used to best allocate resources. Tracking equipment and other assets prevents ordering the same equipment or asset from multiple departments; utilized equipment saves time by eliminating the need to request or reallocate/stage equipment; proper maintenance keeps equipment up-to-date, prolonging its lifespan; and it avoids a large inventory/supply list through proper utilization and upkeep of equipment. 

Bed Management and Patient Flow

Proper bed management is crucial to the provider's business profitability and patient satisfaction, and a hospital ERP system provides real-time visibility of bed status and patient flow throughout the system. These systems allow patient transfers to be scheduled, monitor patient discharge, and keep reports of bed availability throughout the facility. All of this follows to increase patient throughput and decrease patient wait time without sacrificing the level of high-quality care. 

Strategic Procurement Management

Modern procurement management is woven into an ERP system with real-time inventory management, reordering of needed supplies, and suggesting the purchasing department make bulk buys. These management tools, with advanced analytics, track purchasing trends for current suppliers and providers, negotiate contracts with vendors, track contracted supply providers and non-contracted supply providers, and eliminate required and/or emergency purchases, which carry a higher purchasing price.

Waste Reduction: Cutting Costs Without Cutting Corners

Inventory Optimization

The medical supplies inventory is one of the highest expense categories that hospitals incur. ERP systems utilize complex algorithms to manage inventory, and at the same time, they play a vital role in waste minimization through the following:

- Automating stock levels to evade surplus inventory and shortages

- FIFO (first-in-first-out) management to less waste from getting expired

- Consumption pattern analysis to know the amount to order

- Vendor performance monitoring to assure quality and delivery

These capabilities can lead to a reduction in inventory cost by 20-30%

Reducing Billing Errors and Revenue Leakage

Hospitals lose millions of dollars each year due to billing errors. ERP systems are able to automate charge capture, check insurance eligibility in real time, and spot inconsistencies in charge capture before submitting claims. As a result, there will be a decrease in denied claims, faster payment cycles, and the recovery of potential revenue that might have otherwise been lost due to billing violations.

Energy and Facility Management

The latest ERP systems for hospitals not only offer support to clinical and administrative departments but also contribute to the management of facilities through specific modules. These modules can monitor the use of energy, enhance the performance of HVAC systems, and handle the performance of preventative maintenance scheduling to contribute to the reduction of utility costs and lifespan extension of the infrastructure. 

Data-Driven Decision Making

The ERP system's most important asset is probably the actionable intelligence it generates. Through real-time dashboards and reporting tools, hospital administrators will be able to spot inefficiencies or opportunities, keep track of key performance indicators with scorecards, and improve the decision-making process so that the outcomes are more favorable.

Measuring the Financial Impact

Quantifiable Cost Reductions

Hospitals that adopt comprehensive ERP systems generally realize:

·     25-35% reductions in administrative costs

·     20-30% reductions in inventory costs

·     15-25% increases in revenue cycle performance

·     30-40% decreases in billing errors

·     10-20% reductions in operational overhead

The total savings typically compound and may fully cover the investment within 18-24 months.

Beyond Cost Savings: Enhanced Patient Care

Although cost savings is a significant advantage, the most significant advantage of an HRMS for hospitals is the potential to improve patient care. Each of the advantages of moving to an HRMS mentioned above will have positive effects on the scores and satisfaction ratings for patient care, including faster processes, improved accuracy, more timely access to resources, and improved communication and interaction between departments.

Implementation Considerations

Choosing the Right ERP Solution

Not any ERP systems are equal. Hospitals should make sure that they are choosing an ERP solution that is made to serve a healthcare organization with specific regulatory requirements, privacy regulations of patients, and clinical workflows. The next step would be to ensure that the system is scalable and has an easy-to-use platform and a supplier who has proven experience in the healthcare field.

Change Management and Training

Implementation of the ERP must have change management plans created and implemented. The training plans, pilot plans, and support plans will play a vital role in assisting the staff to change to the new system and make the best of the functionality of the system. Hospitals must prepare sufficient resources to train and understand that a transition phase would be encountered as employees shift to new modes of operation.

Future-Proofing Your Hospital Operations

Hospitals must also be on the move to embrace technologies that multiply efficiency, reduce costs, and, above all, enhance their patient care. Still in the history of evolution, the current ERP systems will support the future expansion, operational perfection, and sustainable financial functioning in an exceedingly competitive healthcare market environment.

Are you willing to enhance the cost of hospital operation? We would be happy to collaborate with you to introduce a new systems-based approach throughout your organization that would streamline your process and increase the capability of your company to provide assessed outcomes. Do not get stuck on an old thinking style. Demand To have Engage Softwares as a partner to carry you to the best practices of future hospital management.