It’s an all too common
refrain. "We purchased this software and it has not lived up to its
expectations…not provided an ROI."
Hospitals in the U.S. are
in a precarious position. Half of all hospitals lose money on
operations. The other half has barely break-even bottom lines, and those
are worsening. There is a tremendous need for capital to use for
facility replacement/renovation, investments in new clinical technology
and computer/software technology. And, I almost forget to mention, there
is an extreme shortage of capital and no obvious new source on the
horizon. As actor William Bendix, as character Chester A. Riley used to
say in the 1953-1958 NBC-TV sitcom, "The Life of Riley," "what a
revoltin’ development this is!"
For supply chain
management executives, there is, sorry to say, no deviation from this
theme. Supply chain management software is obtained the same way.
But it doesn’t have to be
this way. What is needed is an entirely new approach to how software
tools are acquired.
Historically, the process
of acquiring software has gone something like this:
• The hospital identifies
its needs for information systems through some process; sometimes
engaging a consultant to help. Usually, this is entirely focused on what
technology capabilities it has that it wants to make sure it keeps, plus
recognition of what it doesn’t have, and therefore, wants.
• Frequently, the next
step is to create a Request for Information (RFI) that invites suppliers
of information technology systems to provide their company
qualifications and the features of their software; how it meets
hospitals’ needs. No proposal/bid is included, and the hospital is not
committed to act on any of the responses.
• Next, or sometimes
instead of the RFI, the hospital produces and sends out a Request for
Proposal (RFP). The response to this is a formal bid; what will the
vendor provide, how the specifications will be met, and, how much will
it cost.
The reasons the above is
not resulting in satisfied customers are:
• The RFI or RFP
processes do not allow or require the technology/software companies to
truly understand the idiosyncrasies of the hospital
• The responses focus on
only the software the supplier has to sell
• Software alone is not
going to address the supply chain business processes that need the
software to work better, yet probably have to be changed to allow the
software to provide the total benefits touted and/or desired.
• Software is usually
purchased with some help with the installation provided by the supplier
or a third party. This includes education (training the trainers) and
loading the files. It does not include total implementation. So
no wonder it falls short of actually achieving much more than automating
what was manual, or changing the way the automation happens – for better
or worse.
Think about when you
obtained the new upgrade to Windows or Microsoft Office. It was easy to
install and it came with either a reference manual or the access to a
downloaded version. However, if no one was able to show you how to use
the new features in Power Point or Excel on tasks you do every day, you
couldn’t take advantage of the features and gain the benefits until you
stumbled upon them or figured them out. You did not achieve the outcomes
you sought, or, at least you didn’t for a very long time.
As a further
illustration, consider this: A leading hospital supply chain management
software company reports that less than 5 percent of its customers use
the contract management feature in the base package! When asked, supply
chain leaders state their technology needs include contract management
as one of the top items!
Striving to find a solution
When engaging a business partner to provide supply chain management (or
any other) software, the software should be recognized for what it is…a
tool. Software is an enabler that helps improve operations, information
processing and analysis. By itself, software can’t "do" anything.
Management and staff use the software tools to make decisions, take
action, process transactions in a new, improved way, so the supply chain
improves performance. Sounds just like a "solution," doesn’t it?
Prospective software
buyers and providers would both benefit from the solution approach. The
buyer should invite and require submitters to make the investment in the
time required to understand the environment of the buyer/hospital. This
would be an "assessment" of the entire supply chain: organization,
operations, outcomes, etc. And it would be at a requisite level of
detail, which would demonstrate how well the potential supplier can and
does understand the specific situation at that hospital. Not just
aggregate industry knowledge, which may or may not match that of the
individual hospital. While supply chain management principles are
universal, their applications are not.
The supplier then would
be in a position (and required) to present how the supply chain could
and should operate, using its technology tools, in a way that achieves
the hospital’s goals and objectives; in specific terms. It would also
allow (require) the supplier to calculate a savings associated with the
new model and subsequent purchase/use of its software, and the Return on
Investment (ROI).
Finally, the supplier
would be expected to help the hospital make those changes in operations
and show how to use the software to make it all happen. This is far
beyond basic installation.
Impact of a solution
What would this change? Quite a bit, and mostly for the better.
First, the hospital would
get the following: A solution-driven outcome. That means
something tangible, like:
• Real bottom line ROI,
not just "feel good" benefits like "simpler transactions" or "enhanced
productivity"
• Savings that can be
used to fund/pay for the software and possibly other investments. Or go
to the bottom line for future needs (buildings, raises, and/or other
technology)
• Reduced risk of a
technology purchase failure, or disappointment
• A cohesive plan that,
if executed, will transform the supply chain from what it has been to
what it can and should be. A plan that integrates technology with
operations in a way that allows the software to be optimized, which in
turn, helps to optimize the operations
• A supply chain that is
efficient and effective; that does the right things in the right way.
That helps clinicians save time and effort and apply that saved time to
patient care
• Technology and a
business partner that really knows the hospital’s business operations in
a way that it can help provide the total solution
• Data and information
that can be used to manage daily operations, find additional savings or
expense avoidance opportunities, and tracks performance
• An infrastructure that
can sustain the transformation in the supply chain, so initial savings
and improvements do not disappear
Some might consider these
effects to be less positive, or, at least relatively so:
• A longer time to
complete the process because of the addition of the "assessment" step.
This can be minimized if the chosen supplier applies adequate,
knowledgeable resources to the process.
• Greater (perceived)
expense to acquire and implement the technology. Remember to take into
account the ROI that this will derive.
• A need to change the
operations of the hospital, rather than having software used or
customized to do things the way (not always the best way) the hospital
has done them.
Seems like a lot to gain
with little to lose.
Hospitals would be well
off to use this approach with all technology/software acquisitions. It
would help them improve their likelihood of success, their operational
and financial health. In short, their outcomes.
HPN
Jamie C. Kowalski is vice president of
McKesson Provider Technologies, Milwaukee, WI.
