CMMS advances are improving inventory control but few systems have a complete ERP
Hospitals track thousands of supplies daily, from medications to catheters and MRI machines.
Hospitals depend on their supply chains for critical medications, medical equipment and a host of other items that keep operations running smoothly and ensure patients get the best possible care. Keeping track of the tens of thousands of supplies in their inventory can be daunting, yet many hospitals still used outdated systems of inventory management. In a recent Cardinal Health-SERMO survey, only 17% of hospitals reported using an automated inventory management system. The vast majority still rely on some form of manual inventory control.
Mike Busdicker, director of clinical engineering support services at Intermountain Healthcare, says most hospitals today use some form of computerized maintenance management system, or CMMS. The problem is that most of these systems are standalone systems that aren’t integrated with other systems throughout the organization or the supply chain. Few hospitals and health systems have a complete enterprise resource planning (ERP) system with procurement, inventory, maintenance management, parts inventory, fixed assets and the capital budgeting process all wrapped into one integrated and interfaced system.
A recent GHX survey, however, shows that healthcare organizations want tools that will optimize supply chain management. In its annual survey of supply chain provider organizations, predictive analytics and the use of data for informed decision-making were the top priorities, followed by standardization, contract management and optimization and reducing costs.
“The supply chain is like the circulatory system of a healthcare provider,” says Greg Melendez, practice director at Top Tier Consulting. “It must work for the organization to function, and when it breaks, the organization stops functioning — no supplies delivered to the operating rooms, no medicine to the patients, or no supplies for critical areas.”
Lack of a CMMS is just part of the problem. One-fourth of respondents in the Cardinal Health-SERMO survey didn’t know if their hospitals had an automated inventory management system while hospitals that do often aren’t using them to full capacity.
When Melendez assists with system implementations or upgrades, he often finds the software being replaced or updated is only partially being used or the hospital isn’t using all the functionality it purchased or never redesigned operational workflows to support the system.
Save time and money
When used properly, CMMS can improve asset management, schedule and track maintenance, facilitate recalls and help reduce loss and theft of equipment. It can also reduce purchasing costs, improve data and analytics to support decision-making and improve contract management with suppliers. According to the Cardinal Health-SERMO survey, automating the supply chain could save hospitals over $500,000.
Enhancements such as real-time cost analytics, “just-in-time” inventory management, paperless purchasing and receiving, process-driven automation, customized order catalogues and direct-to-order deliveries are giving hospitals reasons to invest in a CMMS.
“Healthcare organizations have a very high regulatory and reporting requirement, and a properly functioning CMMS can alleviate some of this through providing the appropriate data and controls,” Melendez says.
Intermountain Healthcare implemented Oracle’s People Soft ERP three years ago. The system handles human resources, finance, procurement, CMMS and asset lifecycle management.
“We track all of our operational and capital assets in the maintenance management system,” Busdicker says. “No matter what the capital threshold is — ours is $5,000 — if it’s an operational asset that has regulatory requirements associated with it [such as] calibrations, asset tracking for service history...we do those in the maintenance management system.”
Once an asset enters the system, it’s assigned a preventive maintenance schedule and an inspection is automatically generated for when it is due. Intermountain also uses the ERP to generate unscheduled work orders from nurses and caregivers and then tracks when the order comes in, who was assigned to the repair and when it was completed.
Other information in the system — purchase dates and expected useful life of equipment — helps staff to know when a piece of equipment is nearing the end of its life cycle and budget for replacements.
Supply chain management at Intermountain is a collaborative effort, according to Busdicker, who says executive leadership regularly seeks input from the clinical and operational sides of the organization to minimize downtime when equipment needs to be replaced or repaired.
MedStar Health is also using computerized management systems, says Stephen Wooldridge, vice president of integrated real estate & facilities. The Maryland-based health system uses CMMS to manage maintenance activities, work order close out and productivity across its 10 hospitals and ensure all clinical areas remain safe and reliable. An ERP manages inventory and procurement to ensure optimal utilization and availability, Wooldridge told Healthcare Dive.
So why aren’t more hospitals using ERP? Part of the problem is availability. "There are limited systems out there where everything is integrated and interfaced to maintenance management," Busdicker tells Healthcare Dive.
In addition, implementing and adapting to an ERP is not easy. “There was a definite learning curve in switching from a legacy standalone system to the ERP that includes maintenance management,” Busdicker says. “We’re still going through that learning curve” to generate reports and maintenance information, he adds.
Another problem is cost. Depending on the size of the organization, the direct cost of the solution, the timeline and complexity of implementation, staff training and annual support costs, a CMMS can range from a few tens of thousands of dollars to several million dollars, says Melendez.
The CMMS’ scope and structure will also impact its cost, Melendez notes. For example, does the tool include electronic data interchange, workflow automation or barcode scanning? Will it be implemented in the client’s data center or delivered as a SaaS via a web page?
“Not understanding or planning for these factors can lead to cost overruns, missed milestones and a solution that requires significantly more investments after the initial implementation,” he says.
Curtis McEntire, director of performance services and optimization at Omnicell, thinks everybody shares some accountability. “On the provider side, they’re focused so much on the clinical systems,” he says. “There wasn’t a lot of push to the vendor side to say, hey, we need systems that can do x, y and z to help us from an operations standpoint.”
That’s starting to change as hospitals realize their disparate systems need to come out of their silos and talk to each other. Vendors are now making a concerted effort to design solutions that connect systems and increase efficiencies.