Despite advances, software makers and hospitals still face formidable challenges

by Karin Lillis

Financial analysts predict the healthcare information technology market will grow 8 percent to 10 percent annually over the next five years. But along with growth comes a certain set of challenges. Naturally, materials managers aren’t immune from some of the pain — and the pleasure — that growth always seems to bring. 

A portion of that progress includes the use of enterprise resource planning (ERP) systems, which can help a hospital integrate a broad range of capabilities that capture, store and analyze both clinical and financial data across many, if not all, aspects of the enterprise, according to the Association for Healthcare Resource and Materials Management. AHRMM, the chief trade group for materials managers, held a special three-day technology summit in Atlanta in September that was attended by a select group of materials management professionals. The summit, which focused on ERP, was sponsored by corporate underwriters Kansas City-based Cerner Corp., St. Paul, MN-based Lawson Software, Alpharetta, GA-based McKesson Information Solutions and Pleasanton, CA-based PeopleSoft Inc.

While attendees seemed to agree that ERP systems ultimately could streamline the supply chain and other processes at the hospital, the challenge remains concerning difficulties many such systems have connecting — or “talking” — to older legacy systems.

“Connectivity is key,” said Florence Doyle, division chair for materials management at the Mayo Clinic in Rochester, MN. Doyle also heads the AHRMM technology committee. “You’re not going to have all systems from the same company. But ERP systems are clearly evolving. I heard from a number of my colleagues that have implemented ERP systems that the functionality they desire isn’t there with the current release, but they are confident that the next version of the programs they use will have a fair amount of the issues worked out. They want to have a part in helping ERP technology evolve and realize there will be challenges along the way.”

“ERP systems are getting there. They’re more stable and more mature than they were a year ago, and six months from now you’ll see something even different than what we see today. Both the vendors and the providers are evolving,” AHRMM president-elect Marc Westerman told attendees. Westerman is corporate director of materials management at Orlando (FL) Regional Healthcare System.

Inside ERP and the healthcare sector

Enterprise resource planning systems collect data from multiple sources, process the data into meaningful information and allow access to the information from multiple locations across the enterprise, in this case a hospital. Data include clinical, financial, administrative and strategic information. An ERP system typically uses or is integrated with a relational database, and integrates the database, applications, interfaces and tools.

“With ERP, finance can talk to materials management and human resources,” Mayo’s Doyle explained. “Salary budget and supply budget are the drivers on the expense end and we’ve now integrated it. Information is coming from the same source in the same manner.”

A good ERP system can produce useful rewards, including tactical and bottom-line strategic benefits such as reducing operating costs, increasing operational control, improving time efficiency, adding more and faster access to information, promoting software consolidation, and giving more efficient task management, paper reduction and increased accuracy of information. However, implementing these sophisticated systems often costs a substantial amount of money and time, including retraining employees who must use the new system. There may also be security issues to overcome.

Ideally, an ERP system can help a business link fragmented operations, many times replacing a “multiplicity” of legacy systems. Common information is shared across an integrated set of application modules, speeding transactions, consolidating financial records, improving inventory management and cutting costs.

The challenge in the healthcare arena has been getting ERP systems to integrate with legacy systems in the hospital that might have been in place for a decade or more. Simply put, the newer computer systems can’t always communicate with the older ones, stopping the stream of data from one area of the hospital to another. Moreover, programs from different manufacturers are often written in different languages, requiring translation before information can flow from one system to another.

“Legacy systems have been a bedrock for 15 years in some cases,” one participant, a materials manager, pointed out. “There are not a lot of alternatives. The first system is already in there and it’s up to you, the vendor, to find a way to integrate your product. We need surgical services to talk to materials management and billing so we’re better able to communicate.”

“Whenever someone talks interface, our folks shudder,” said AHRMM president Al Cook, the chief resource officer for St. Francis Medical Center in Monroe, LA. “I think some of the problems have been that perhaps one vendor is developing a competitive application to another company, which doesn’t allow the competitor’s information into its system.”

For a successful interface, one application must prepare the information in a stream that the other application can accept. The receiving application may have firewalls installed and might not allow information from the first application to flow to its system, Cook explained.

Some 52 percent of attendees polled at the conference said their healthcare organization has purchased an ERP system, according to data collected by AHRMM. At the same time, just 41 percent of those healthcare systems have totally installed their ERP. Fifty-nine percent reported a partial ERP installation, according to the onsite AHRMM survey. About one-third of participants who do not have an ERP system said their organizations are considering purchasing one.

Of those healthcare organizations that have totally or partially installed a system, only 8 percent of those asked reported they are “very satisfied” with the performance of the ERP. Forty-two percent indicated they are “somewhat satisfied,” 19 percent said they were “somewhat dissatisfied” and 12 percent were “very dissatisfied,” according to the AHRMM data. Two in five survey participants chose not to rate their satisfaction level.

To be sure, there are some unhappy customers. “I’m not totally satisfied with our ERP. Even fully installed, it’s not great on gathering materials management information,” a materials manager from a Northeast hospital observed. “It’s great in human resources and finance, but it’s not up to speed for materials management. The ability to capture data is problematic. Our business partner has been responsive, though. It looks like it’ll be solved, but you never know until you get there.”

While acknowledging that ERP system upgrades should help “fix some of the bugs,” some attendees expressed concern about the amount of time and resources they must dedicate to each upgrade.

One participant summed it up this way: “Upgrades are time-intensive. You don’t have the time to keep up with them. It can take six to eight months to implement testing. We do it once every year or two because of the amount of time it takes to do these upgrades. The cost of implementation includes the cost of people, and you better dedicate a lot of resources to the users.”

A materials director for a large hospital network in the East said his organization had to allow him to dedicate all of his time to the upgrade while learning how the program worked. Another person maintained his regular job responsibilities while he studied intensively with the software company. “A materials manager needs to spend time on the project because his or her people need to understand that system,” he said.

Talking about trouble

Frequently, the razzle-dazzle languages that today’s software is written in can turn against even the most well-conceived systems by restricting communications. There are some solutions to that dilemma, but even those have limitations. Every type of software is written in a particular technical language, explained Jamie Wyatt, vice president of healthcare solutions for software giant PeopleSoft. “As soon as you ask multiple systems that were written in different languages to agree on a single language to ‘speak’ to one another, you’ve got an issue,” Wyatt said. An interface engine can in many cases help overcome that challenge by translating commands into a language each system can understand. “You write the common translation coming from both languages. All the user does is purchase the box, the software and the expertise,” Wyatt explained.

For instance, PeopleSoft software can communicate certain data elements to a surgical services department, such as the name of an item, its price and unit of measure. The information is “published” — or sent — into a generic arena where the surgical services system can “subscribe” — or pick up — the necessary data to bring into its own system. “Or if that information is going directly to the OR system, our software allows the user to send it right into the system in that common language,” Wyatt said. “But what happens if the other system doesn’t want to ‘talk’ to you? That’s the big issue discussed all weekend long at the AHRMM summit. The publisher of the information can’t force someone to subscribe to that information.”

“PeopleSoft has created translation sets, but there are a number of systems that are 15 to 20 years old that don’t take inbound messages,” Jennifer Langer, vice president of healthcare strategy at PeopleSoft, told attendees. “We consider ourselves to be an integration broker, but there are still places where the doors are closed to us.”

“We have more than 1,000 materials management system clients. Integrating legacy and go-forward systems is a real issue that we have,” noted Todd Tabel, vice president of marketing for McKesson Corp., a division of the big San Francisco-based med-surg and pharmaceutical distributor that has developed a bridging technology that works with both legacy and so-called “go-forward” systems. McKesson also offers interfaces to handle other types of programs that a hospital may already have in place.

“We offer e-procurement technology, an e-commerce solution that integrates with the legacy system and the go-forward,” Tabel said. “The user doesn’t feel the need to rip out the materials management system because we provide hospital-vendor connectivity.”

Some software manufacturers are attempting to overcome the connectivity challenge by incorporating XML (extensible markup language) into their products, a programming language that some say provides more flexibility than currently used electronic data interchange, or EDI. 

“EDI has a very fixed format structure. There needs to be a certain order with certain field lengths and certain parameters, certain items listed on the front end and back end of each transmission,” PeopleSoft’s Wyatt explained. “XML, however, says the information does not have to be in any particular order. The field length can be variable and each piece of data is self-identified.”

McKesson’s Tabel disagreed. “EDI is the most effective tool in automating the process and has well penetrated the healthcare arena, but it’s underutilized,” Tabel said. “Seven to eight vendors are connected via EDI in most organizations and only about three to five departments in that organization use EDI. Here we are as an industry saying XML is here to save the day, but we’re not using what’s already in place to help reduce costs.”

November