Reforming Healthcare Part 2: Introducing Efficiency into the Hospital or Practice

Enterprise Resource Management is the only way

Introduction

Normally, we talk about healthcare and health insurance in this space and today is no different.  Today we are going to demonstrate a solution to the hospital waste problem.  The format is going to be slightly different with a “Current Situation” section detailing the problem and a “Logical Conclusion" section discussing what will happen if the situation is left unchecked.  Then we will present a short "Solution" section that is separate from the details of the solution itself.  This will give you, dear reader, the opportunity to see the solution quickly and easily without bothering with the messy details, if you like.

The Situation

Hospitals and practices in the United States are run just like most businesses: charge enough based on experience to have money left over at the end of the month.  There is no preplanning and little cost control.  Administration runs from fire to fire with little to no thought to the overall functioning of the hospital as an enterprise.

The Logical Conclusion

Given rising costs and falling reimbursements many hospitals, particularly small and rural hospitals and practices will cease to be profitable and simply close their doors forever.

The Solution

Provide both the hospital and the practice with a viable Enterprise Resource Management (ERP) system.  This system will track and account for every part of the financial health of the enterprise.  This will give us the ability to generate a profit and loss statement (P&L), with one click, on any consumable, piece of equipment, room, employee, department or enterprise.   That P&L will pinpoint cash leaks and allow administration to streamline and possibly even automate processes with the most egregious first.

The Details

An ERP system basically tracks everything. We will list the major categories, some that we will throw in as nice-to-have, and demonstrate how we will produce the promised P&L and any other custom reports.

What is an ERP?

Every administrator I have ever had the pleasure of speaking with tells me a practice management system is for billing. Billing is just a small part of what a practice management system should do. If you are going to manage the practice, manage the practice, or hospital and include these things:

• Financial Management
  ERP systems are used to manage financial transactions, produce financial statements such as balance sheets, manage companies' tangible and intangible assets, and track money owed by and to the organization.
• Supply Chain Management
  ERP systems help to monitor the stock levels, track inventory movement, manage the movement of goods, and automate the purchasing process.
• Human Resources
  In an organization, ERP systems help to manage employee records, automate payroll processing, and manage recruitment and onboarding.
• Customer Relationship Management (CRM)
  ERP systems help in sales automation, automate marketing campaigns, track customer interactions, and improve customer satisfaction.
• Project Management
  ERP systems support project planning and scheduling, and monitor project time and expenses for accurate cost estimation.
• Manufacturing
  ERP systems help in production planning, list all the raw materials required for product manufacture, and monitor the production process.  While it may appear that a practice or hospital doesn’t need manufacturing, they do provide a service that requires labor, capital, consumable and equipment assets and of course real estate, just like making a widget.

Let’s break these categories down and see how they relate to medicine and the hospital or practice.

Financial Management

When we say financial management what we really mean is an accounting system.  At Sentia we have produced a ledger based accounting system to automate credit unions, and adapted this same system to the ERP.  This tracks and accounts for all expenditures in the enterprise.

Supply Chain Management

Since we already account for all expenditures and real estate and rooms, it is simple to track and account for inventory levels, movement, consumption and even automate ordering.

Human Resources

Human Resources (HR) is a little bit of a sticky wicket and every little company in the world has produced some kind of solution.  Our take on that is that if you have to hire developers to integrate a solution, you may as well just build the solution yourself, and better than anyone else can.  Components of an HR system include:

• Payroll Management: Automates payroll processes to ensure accuracy and compliance.
• Time and Attendance Management: Tracks employee hours and attendance for payroll and reporting.
• Employee Benefits: Manages employee benefits programs and compliance with regulations.
• Recruitment and Staffing: Manages the recruitment process, including applicant tracking and onboarding.
• Employee Onboarding: Facilitates the onboarding process for new employees.
• Employee Offboarding: Manages the offboarding process for employees leaving the organization.
• Performance Management: Manages employee performance and reviews.
• Training and Development: Manages employee training and development programs. Sentia has a dynamic Questionnaire tool we have used to automate patient paperwork that is suitable for training and testing.
• Compliance Management: Ensures compliance with labor laws and regulations.
• HR Reporting: Reporting: is kind of the pièce de résistance that makes this whole exercise worthwhile.

Customer Relationship Management (CRM)

In this case the customer is the patient, but we do want to keep in contact with them to manage outcomes in terms of follow on care and health and wellness to avoid disease altogether.  This looks amazingly like a marketing campaign, and can and will boost the bottom line of your practice or hospital.

Project Management

Any product or service provided is an instance of a project.  Project Management then becomes getting all the correct resources to the correct place at the correct time.  If you say that fast, it sounds like care management.

Manufacturing

ERP systems help in production planning, list all the raw materials required for product manufacture, and monitor the production process.  While it may appear that a practice or hospital doesn’t need manufacturing, they do provide a service that requires labor, capital, consumable and equipment assets and of course real estate, just like making a widget.

Conclusion to Details

We use regular ERP nomenclature here to highlight the fact that running a hospital or practice is no different than running any other enterprise.  If you have a different opinion, take a look at this: Medical Technology Is NOT Different.

An in depth discussion of exactly how this all works is beyond the scope of this article, but we will say that financial management becomes a set of reports that quite literally shows “where the money goes.”  That allows administrators to trace and fix cash leaks without paying an accountant to sit in a room with virtual mountains of spreadsheets for weeks or months trying to figure out where the money goes.

The ERP style PM doesn’t necessarily fix hospital waste, but it does allow the administration to easily track expenditures and even find a cost for each individual procedure and compare that with all monies earned for that procedure.  

Confidentially, we at Sentia will probably be looking at these financial reports as well, and ensuring that there is no fraud or exorbitant waste keeping hospitals from paying doctors a wage that will allow them to enjoy the fruits of their labors.  

We have produced a more in depth article about this here.

Conclusions

We have shown a way to control hospital costs in a way that has not been done in this industry, but with technology that is used in all other cases.

While this only shows the practice or hospital where the money goes, and it is up to them to fix the problem, we here at Sentia will be looking at these financials and ‘helping’ to report them to the government and public in the case of publicly traded and not-for-profit systems.  These two categories include the vast majority of hospitals and are where the vast majority of the waste is.

This is part two of a three part series.  This part details how to manage a practice or a hospital in a way that treats it like an enterprise instead of running from fire to fire with  flame retardant boots.

We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. This system includes the automation of the health insurance industry completely.  We have designed and are currently building the ERP style PM system.  Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

If you liked what you read contact us here, on our site, SentiaHealth.com, our parent company SentiaSystems.com, or send us an email to info@sentiasystems.com or info@sentiahealth.com