When disasters like hurricanes Katrina, Rita and Wilma, slam into the Gulf Coast, when wildfires enflame California forests, when heavy rainfall floods the Northeast, hospital administrators and clinicians can only gasp in horror, shake their heads in a sigh of resignation or scramble to protect boxes and file cabinets stocked full of paper records.

Curiously, hospital materials management professionals have longed for electronic solutions to these challenges for more than two decades. While the healthcare industry freely accepts and admits that it technologically operates about 10 years behind the grocery, manufacturing and retail industries, healthcare providers certainly can’t blame the slow progress on vendors. After all, software and systems for healthcare facilities have pretty much kept pace with perceived demand. Hospitals and other healthcare facilities have been able to choose from a plethora of options over the years, including bar coding, proprietary and open electronic data interchange, and more recently the Internet and radiofrequency identification technology.

So as we reach the halfway mark of the first decade of the third millennium, why aren’t healthcare facilities farther along in the paperless pursuit, particularly in the area of supply chain management? For some, the popular excuses have grown tired and trite. No standards. Costs too much. Vendors should initiate the process and offer it free to providers. No, providers should initiate the process and pay for it. Software and systems don’t talk to each other. Not enough studies have been done. Too many contradictory studies have been done…and by the vendors. It’s intimidating. Change is bad, if not uncomfortable and unsettling. What would I do without the convenience of paper?

What will it take to put an end to these excuses and move forward? Is it even conceivable that hospital supply chain management operations exclusively can function electronically in a fully paper-free environment? In our lifetime even?

Healthcare Purchasing News wanted to find some answers on what it will take for supply chain management to stop talking and whining about going paperless and actually start doing something comprehensive about it. As a result, HPN Senior Editor Rick Dana Barlow asked key executives at a handful of market-leading companies to share their recollections on how we arrived at this point and their ideas on how we proceed to a paper-free world.

HPN: How important is it to set realistic and reasonable expectations and goals for going paperless? Are healthcare facilities capable of going completely paperless, particularly in the area of supply chain management? Can they function effectively (efficiently is another issue) without paper in their operations? Does the fiscal and behavioral challenges and pain outweigh the fiscal and operational efficiencies and savings? What’s really slowing progress to a paperless environment? How conceivable is a paperless operation, say, during a disaster that knocks out electricity and telephone service? Finally, how feasible is it to expect cost-conscious healthcare facilities to invest in and maximize the capabilities of software and systems to function in a paperless environment?

ECKERT: As an industry, healthcare faces daunting challenges unlike any other, with intense regulatory pressures, declining volume and revenue, record malpractice insurance rates and settlements, a rapidly growing aging population and HIPAA requirements, to name a few. While health executives are looking at all aspects of their operations to uncover cost savings and efficiencies, their first priority must be improving both the quality of care for their growing patient population and of work-life balance for those who deliver the care. Consequently, it is no surprise to me that the first place hospitals are looking to invest IT dollars is in clinical areas that directly impact the quality of care for patients.

Over the last few years, hospitals have made meaningful progress in using IT to support both clinical and operational goals. You need only to look at recent government action, with the pending health IT legislation, as one example of the widespread understanding of the importance of IT in healthcare. I believe that once the clinical side has been fully automated, and the paperless dream proven to be a successful reality, we will see more and more hospitals pursue that success in multiple operational areas. Supply chain should be the next on the priority list behind clinical processes and labor as it is the next largest operating expense category in the hospital’s budget. In fact, some very large hospital systems – such as Providence Health System – have been investing significantly in clinical IT resources for several years, and have now begun to integrate those efforts with the good work they are doing in managing their complex supply chain.

This is not to say that hospital supply chain professionals should just sit in wait until the clinical IT infrastructure is in place before making improvements in their business processes. Instead, hospitals should be seizing the opportunities to get their materials house in order by establishing a solid foundation for automation. Hospitals should continue their efforts to get connected with suppliers with readily available and cost-effective technology, and they should clean and standardize their supply chain data for more meaningful and accurate transactions and analyses. Dirty data is a huge problem – if you don’t have the ability to know what you are buying, from whom and at what price, you aren’t able to negotiate better prices or contracts, saving precious hospital dollars.

With supply costs representing about a third of operating costs, hospital executives have begun looking at the supply chain as a priority, but rightfully only after clinical care issues. The industry has already proven that there are significant savings opportunities available for hospitals that invest in IT to automate their supply chain. It’s no longer a question of ‘if,’ but ‘when.’

Jamie Wyatt,
vice president, healthcare industries, Oracle Corp., Pleasanton, CA

WYATT: Healthcare organizations are continually tasked to ‘do more with less.’

With hospital budget restraints ever-increasing, there is no room for inef- ficiency. Healthcare organizations spend anywhere between 20 and 40 percent of their annual budgets purchasing goods and services, but most fail to identify and capture opportunities to improve performance and decrease costs due to inefficient processes.

Paperless procurement systems, when implemented correctly, have a significant impact on reducing operational expenses.

Despite technical advances, the healthcare industry remains largely risk-adverse, and most healthcare organizations fail to benchmark outside of their industry. Being a successful care delivery organization is the typical aim; being an efficient operational organization is a much lower priority. By reviewing business models and best practices of companies beyond healthcare, the industry can reap the benefits of automating processes and investing in new technology. In addition, healthcare organizations can reduce risk by preparing contingency plans for technology outages in the event of a disaster in the same manner that they do for other utilities and services.

The success of a paperless system depends on healthcare leadership’s ability to adjust policies to reflect change accordingly. Strict, consistent enforcement of policies is necessary and leadership needs to communicate the implications of failing to support these new standards. Further, administration, before making a decision to add staff, should maximize current staffing with consideration to time saved by going paperless. Operational, financial and political behavioral change cannot be enforced without putting teeth behind policies.

Implementing integrated supply chain technology solutions can empower healthcare organizations to provide full supply chain visibility across the enterprise – via online portals, online requests for proposals, electronic invoicing, online auctions and strategic sourcing. Armed with analytics, these integrated systems can allow healthcare organizations to identify and manage detailed information about their spending patterns and allow for price comparisons.

Creating supply chains that connect employees in medical facilities, foster collaboration and offer materials management visibility into demand and supply is essential to reducing overall supply chain costs.

Providing the antidote, technology can allow healthcare organizations to improve operational efficiencies and reduce costs – freeing operational and clinical managers’ time to focus on their jobs – while continuing to increase the quality of patient care.

SPARKMAN: As with any large project, implementing an electronic supply chain management system involves basic project management – establishing goals and managing expectations.

Converting to a paperless system is certainly a viable option for providers as long as they have the skills and resources to do so. However, competing priorities such as patient care and safety needs understandably take precedence over the investment of capital dollars in a paperless system. This prioritization of spending coupled with the lack of maturity in the tools and a lack of inertia are all contributing factors to the slow adoption of electronic solutions. As solutions continue to evolve, however, the costs will come down, and we will likely see more providers investing in the infrastructure.

For some providers, there is still a certain comfort level in having hard-copy documentation especially when power and telephone services are down. The electrical and communication back-up systems required for hospitals, however, should enable access to electronic documentation so that operations are not impeded.

All in all, the efficiency and ease of retrieving data through the use of an electronic system will result in better business process management, which providers are encouraged and sometimes mandated to pursue. Hospitals are increasingly being held to higher standards of accountability especially with the adoption of consumer-driven health plans and Sarbanes-Oxley. Therefore, we may see more providers implementing such infrastructures and making greater technological strides.

LOHKAMP: Goal-setting is an important part of any technology project. When setting goals, healthcare organizations should focus on specific business processes that have both high value and that are set up for success. This is an important early step of Lawson implementations.

As technology has evolved, operating a ‘paperless’ supply chain is feasible for most core hospital business processes. For example, using online, self-service requisitions, par or stock counts via wireless handhelds, or automated inventory reorder points, healthcare providers now can capture demand for supplies and electronically send replenishment orders. With one of our newer products, Receiving and Delivery, they can even eliminate paper at the receiving dock by using handhelds to receive and track parcels directly against a purchase order.

To function effectively without paper, a healthcare facility needs to place information at the point of use or point of need. Handhelds, wireless technology and Web-based applications now offer many options for access to critical information. Supply chain management departments may be able take advantage of IT investments made for clinical purposes to wirelessly connect locations within a facility to centralized supply chain information. A complete, comprehensive ‘disaster’ plan that outlines how to complete supply chain operations would allow the healthcare organization to quickly fulfill critical supply needs.

Supply chain management initiatives often have taken a backseat to clinical initiatives. Although this overall prioritization remains today, healthcare facilities should find projects for going paperless that are focused, easy to implement and have a good return on investment – there are lots of opportunities to consider.

Healthcare facilities certainly need to make a compelling business case for any changes to business processes or new technology investments. However, there are many case studies and examples of ‘paperless’ initiatives that can be learned from that have led to significant fiscal and operational efficiency savings. For example, one Lawson customer experienced a 50 percent time savings and significant labor savings for par location management by implementing Lawson technology and adapting its materials management business processes. HPN