"There’s always going to be one group out there that will squeeze the system and use it to its limits and another that will only use what they need and that’s it," acknowledged Frank Fernandez, assistant vice president and corporate director, materials management, Baptist Health South Florida, Miami. "Much depends on whether you’re part of an IDN with tight corporate centralized functions for the supply chain. Those organizations typically integrate their IT systems with that of their GPOs, particularly in the areas of contract management, invoice matching and revenue optimization. They have to explore all options. They’re better users because they can’t afford not to be in order to run such highly complex organizations."

But Fernandez cautions materials managers to resist getting hung up on the MMIS vs. ERP module debate because, ultimately, they both provide a variety of applications for similar functions. "There used to be a perception that MMIS are more user friendly, and more healthcare supply chain friendly but I don’t know how accurate that is anymore," he admitted. "There is also a perception that MMIS companies are quicker to respond to customer needs than ERP companies when it comes to supporting their applications that are delivered as part of their ERP bundle. But again, I don’t know how true that is in 2007 and beyond.

"Clearly, ERP applications are much more complex and require lots more care and feeding," he added. "Data integrity becomes paramount, and many resources are dedicated to this. But then again, that may not be a bad thing. For many multiple-facility, highly complex IDNs, installing an ERP application that includes supply chain automation has been the only acceptable solution."

The users – not the vendors – have to drive this, according to Randy Hayas, corporate director, supply chain services, Shands HealthCare, Gainesville, FL. "People have to look at the end results of what they want," he said. "The end results are the analytics you get out of the system. With that in mind, what functionality do we really need? What are we using and not using? All you may want out of the system is purchasing and managing inventory."

Furthermore, Hayas noted that he doesn’t see much "post-selling" from their vendor to help push usage of most or all features or add more. "It’s up to the hospital and materials management to determine what you want to get out of the system. A lot of people aren’t using electronic requisitioning because it’s not easy to install. People may be comfortable writing that out so it’s difficult to change behavior," he said.

"With respect to the vast majority of healthcare organizations, technology has already out-paced the acceptance level," said James Moore, vice president, sales, Electronic Healthcare Systems Inc., Freedom, PA. "Technology is seriously under utilized. Either vendors have not adequately presented technology’s values, and/or healthcare organizations have not yet been able to appreciate technology’s values. The industry pundits discuss the future of technology, yet too many healthcare organizations do not employ even the decades-old technology of bar code scanning in their supply chain. There are ‘best of breed’ materials management solutions available today offering significant enhancements for the healthcare supply chain. And yet, too many hospitals of all sizes opt not to thoroughly explore or utilize them."

"One of the best practices for implementing any new technology is to make the information delivered relevant to the individual or job role," said Keith Lohkamp, product strategist for supply chain management, Lawson Software Inc., St. Paul, MN. "You want to eliminate the ‘so what?’ factor. It may be a case where the technology remains ahead of some people who are using it. Some people may be on the leading edge, maximizing use of the technology they have in place. Others are still getting ready to take advantage of the technology. That’s not unusual in the adoption and implementation cycle."

Sara Van Kempen, Lawson’s director, healthcare marketing, attributed these complaints to simple change management. "It’s like buying a new car," she said. "You’ll not likely use all of the features – at least at first – until you become comfortable with the car. You’ll do a lot of the same things you did with your previous car before you develop a comfort level that allows you to branch out to using new features."

But Ed Lane, founder, president and CEO, Caduceus Systems Inc., Austin, TX, noted that users need to put these perceived challenges into proper perspective. "The system has to be rich in data content and the data must be easily accessible," he said. "You need to develop the system to provide access to whatever data you need in the form that you need it to do your job effectively."

"[Our] ERP system is a solid transactional system that provides management and financial controls," said Hayas, who was scheduled to become corporate director, materials management, Orlando (FL) Regional Health System, at press time. "However, like most ERP systems that function as the core transactional system they often lack such things as linkage from contracting to the item master and a good spend analytics tool. What we have seen is that the core ERP systems do not focus effectively on other applications, but require that we ‘bolt on’ other ‘best of breed’ systems that interface or take the data from the ERP system and make it more useful.

"All of these have to talk to and interface with one another," he continued. "What we’d like to do is automate as much of this process as possible to take the variability out of it." Hayas, specifically referred to times when the key end users may go on vacation, leaving those who may not be as familiar with the system to cover for them.

Lane links these challenges more to older systems than the newer models on the market today. "There are significant variances in system architectures and in the ability to interface with other systems," he said. "It just depends on the vendor and the system. Architecturally today, it’s not difficult to create these links, whether they are batch or real-time interfaces. You can do it with an open architecture. The system has to be designed to interface or integrate with other systems. We haven’t found a system yet that we can’t link to. But this idea that interfaces and integration pose a challenge could be motivated by software companies wanting to maintain control of the customer. While the subject of disparate systems that don’t talk to each other is valid if you’re referring to older systems, the newer systems using an open architecture shouldn’t have these challenges."

While Lane acknowledged that ERP systems may offer an integrated package covering such financial and operational areas as the general ledger, accounts payable, human resources and materials management, they also need to link with clinical systems and other vendors’ systems.

But Lohkamp points to a much deeper problem. "The real challenges of moving information from one system to another involves common descriptions and synchronized data," he said. "Data may not be consistently described or recorded in the system. Web services make interfaces easier. Ultimately, a lot of those problems are due to the data being transmitted. It comes down to unified data fields. That will help with some of the issues."

"We’ve got the horsepower," said Phil Mears, senior vice president, Catholic Health Initiatives, Denver. "We just need the interconnectivity with other departments, including standard identifiers on items for the item master. We’ve been kicking the tires on this for 10 years. We need to do what the grocery industry has done already."

But one group – providers, suppliers or IT companies – shouldn’t be accountable for data ownership and stewardship, according to Lohkamp. "Each provider needs to assume responsibility over keeping data up to date and clean," he said. "Without that, it’s difficult to move data accurately. It’s ultimately a shared responsibility between software companies and providers and vendors. We at Lawson promote standards and best practices to provide consistency and a way to implement working with Lawson and others.

"It’s fair for the customer to expect us to give them a system that helps them with day-to-day operations," he added, "but standardization of data is a shared responsibility that requires us to work together to come up with solutions."

Yet Lane contends that the IT companies do play a key role. "You have to have clean data and be able to clean it for any system to be useful," he said. "A good system will enable you to cross reference items regardless of the descriptors used. Electronically, a lot of this data can be kept clean. You can get information directly from suppliers, GPOs, and [Global Healthcare Exchange] into your system and set up the system so that it does the cross referencing for you. Keeping data clean is not nearly the challenge it once was. Keeping data updates synced with catalogs has come a long way."

As software companies roll out new capabilities in standalone MMIS technology and larger ERP systems what are some of the more recent noteworthy improvements and where are the growth areas in terms of capabilities, features and benefits in the pipeline?

Fernandez highlighted such areas as contract management, in terms of validating pricing information in the item master, as one improvement. He also singled out mobile supply chain and PAR level inventory capabilities, the ability to import GPO and internally generated contract data and improved sourcing and reporting features that enable automated requests-for-proposals and tie them to the item master.

Hayas focused on electronic requisitioning to reduce variability in product, price and source but indicated more work needed to be done in the area of interfacing with other systems as a front-end application for back-end analytics.

Both Lohkamp and Van Kempen cited mobile supply chain and strategic sourcing capabilities as key areas of improvement and growth over time. "It’s enabling the supply chain management department to become a strategic department in the organization and be recognized as one," Van Kempen said. "End users now have the ability for more strategic reporting that is getting easier. Where you used to go out and search for data to run them, the data are now coming to you. Notifications either show up on your dashboard or they show up in your e-mail inbox."

With more data from a variety of systems and Web portals being fed to the dashboards of integrated systems, "people can focus on strategic decisions and sourcing options more than the day-to-day procurement and inventory management duties," Lohkamp said.

"The power of MMIS is to streamline day-to-day processes – getting [purchase orders] out the door and managing inventory," he continued. "If you’ve implemented MMIS and have done it well enough with [electronic data interchange] your main job shouldn’t be getting POs out the door anymore. The leading edge organizations get their staffs focused more on strategic areas, such as sourcing products in specific areas, managing contracts effectively with vendors in those areas and managing relationships with other clinical departments."

In fact, because materials management is taking more of a leading role in managing supplies for specialized clinical areas, such as the cath lab, OR, interventional radiology, Lohkamp forecasts considerable growth in mobile wireless technology. Much of that growth during the next few years will focus on bar coding, even as radiofrequency identification (RFID) tags and real-time location systems (RTLS) concentrate on equipment.

"Accessibility to data is critical and that’s where the dashboarding capability comes in. It provides ready access to a variety of analytical queries, including identifying costs on an episode-of-care basis, supply costs per surgical case and comparing a surgical group’s performance where you can identify outliers among orthopedic peers, for example and drill down for the utilization of implants and related products," Lane noted. "Unfortunately, many hospitals still try to do this on a manual basis, which makes it much more difficult to accomplish. Relevant secondary product data such as serial numbers and lot numbers can be recorded and tracked within the system. The structure of the underlying database must be flexible and capable of supporting the data components that are being defined by the industry groups that are committed to a standardized Product Data Utility."

At the very least, today’s supply chain IT must make contract management more efficient, according to Lane. "You need good contract data to truly automate the purchasing and invoice matching and process. You can access not only catalog numbers from the vendors or GPOs but also contract pricing with effective dates and have the system automatically apply pricing changes so that your data remains accurate. Aggregating purchases to benefit from volume and tiered discounts and aggregating product purchases completed through GPO contracts across multiple suppliers for accurate rebating is also significant. One of the unfortunate industry norms is that pricing discrepancies account for 2 percent to 7 percent of a facility’s costs. So they receive and pay invoices that are billed with the wrong contract pricing. The theory is that it’s up to the people in purchasing and accounting to know what the price is at all times. With thousands of products to track that can be a challenge."

Ongoing and future improvements in supply chain IT may focus more on ease-of-use, flexibility and portability rather than on high-tech bells and whistles, sources predicted.

Such improvements as easy, plug-and-play network connectivity, elimination of drop-down menus, multiple screens, key strokes and confusing dialogue boxes, remote access and control, touchscreen capabilities, are all key improvements that offer the ability to dramatically enhance processes and provide [a return on investment] that can be calculated in months, not years, or even decades," Moore noted.

Fernandez said he would like to see more applications devoted to the receiving area, perhaps the integration of RFID technology. Sensors could be placed in door frames or the ceiling to automatically and directly read packing slips on the pallets and send that data to the receiving module of the ERP to eliminate the need for keying and human intervention. "There’s still a lot of manual keying going on, particularly on the receiving end," he said. "A lot of economies of scale can be gained there. It may not be as sexy as saving millions of dollars but automating that process will generate definite gains in productivity and workflow."

Hayas concentrated on two fundamentals. "The first is to make entry in to the system easy for the customer that is infrequently accessing the system. Entry or access needs to be intuitive and simple," he said. "The second is the ability to interface or connect with different applications that have been or are being selected and to collect data, convert the data into useable forms, provide data analytics and continue automating the processes.

Van Kempen emphasized interactive and intuitive programmable dashboards that offer a single-screen view of everything a user needs to do his or her job. "You no longer have to run a report from one place and then look for something somewhere else," she noted. "Information is pushed to the end user based on the parameters he or she has set for the dashboard." Users also can customize the technology to offer "sub-dashboards" that give them access to additional information, she added.

Composite applications that involve Web services and service-oriented architectures represent the next wave of development, according to Lohkamp. "[Composite applications] allow us to take a Lawson business process and functionality and combine that with other external applications to solve business challenges," he said.

"For example, you can electronically manage information involving a product recall and match that to your system, as well as monitor cases where the product was used, as opposed to jumping around to different places to gather information. Previously, you’d have to create a report on the recalled product and then hand that off to someone to check inventory levels and then to check with the clinical department to determine usage. Rather than going through this manual process you just run a series of queries on where the items are and where and when they were used."

In fact, applications are emerging today that show where you have something in stock and then electronically creates a workflow to determine who gets the item and the route he or she takes, he added.

Lane concurred. "Hardware is becoming more ergonomic, including screens with browser-based capabilities and better graphics," he said. "Software now can develop system-directed workflows that can be customized and tailored to a facility’s or department’s needs.

"For example, the software can instruct materials managers where to put away products in central stores or give them an efficient pick path for order fulfillment and replenishment, as well as cross reference products," he continued. "The system can tell them what needs to be replenished and where to find it in an efficient manner. The system also can instruct the clinician on all the steps needed to pick a product and charge the patient properly. In the past with the older MMIS and ERP units the user just had to know these things or work from printed reports. Automating this can reduce the training requirements, eliminate a lot of errors and the need for redoing things."

But the most noticeable development is in data freshness. "The key difference today [with wireless hand-held units] is that users are working with real-time information, which enables the management of perpetual inventory," Lane said. "In the past you had to place the hand-held unit in a cradle and upload the data – typically in a batch mode – to the system."

Moore urged materials managers to refocus their perspective on the touch points between the patient, caregiver and supplier with the goal of consolidating or eliminating as many of those touch points as possible. "An optimized supply chain would easily and cost-effectively capture all necessary data at the point of use and automatically process all captured data to the appropriate replenishment location, either internally or externally… with applicable charges to the patient’s record, and making cost accounting data available for the continual negotiation and management of payment agreements," he said.