Some healthcare execs have been nervous to leap into the cloud, for a few reasons.
First, healthcare faces strict regulations on data privacy and critical demands for system connectivity and speed. Plus, many healthcare organizations have been too immersed in other issues to undertake major IT initiatives. Grant Thornton Advisory Business Consulting Principal David Reitzel said “over the last 10 to 15 years, healthcare organizations have been very focused on position, clinical advancement, patient safety, and all the things that are part of their core mission – patient care.”
However, modern patient care has become dependent on advanced IT solutions and clinical data. Meanwhile, healthcare staffing and supply chain management have become a web of complex costs, options, and requirements. To manage the masses of data across myriad teams and external partners, healthcare organizations typically turn to enterprise resource planning (ERP) solutions. These ERP solutions interface with disparate systems to give busy healthcare professionals a single point of access.
But now, most ERP solutions are moving to cloud platforms.
That means healthcare organizations must now prioritize IT cloud initiatives to maintain their access to the data they need every day.
The booster shot
To move to cloud-based ERP, healthcare organizations need to make IT investments in a few different areas – and they need to align those areas. “You’re going to be making core business changes. You need to have strong executive commitment, and strong alignment across organizations,” Reitzel said.
“I’ve often found that this type of move – although it sounds like it ought to be a technology project, it’s not – it’s a business-driven project. And organizations need to align around the business and make sure the business is enabled. The business needs to be prepared to drive it.” Reitzel said.
To drive the shift to cloud-based ERP, healthcare organizations need to prioritize two factors up front. “First and foremost, the governance around decision making and change management is critical. Secondly, you need to understand your data. You need to make sure you understand where your data is, what data is good, and what data is truly managed as part of your ERP. Are people enriching or enhancing the data anywhere along that continuum of the data supply chain? Those are all things that most healthcare organizations haven’t focused on over the last 10 or 15 years,” Reitzel said. “Let me give you an example. The chart of accounts – if you go to a cloud-based solution – will need to be redesigned. And that chart of accounts information is used in revenue cycle systems, clinical systems, HR payroll systems, and a variety of systems that may be on-premise or in other cloud-based applications. So, you need to understand the upstream and downstream implications of where your data is used, and how you’re going to manage that moving forward.”
To help prioritize governance and data management, Reitzel recommends that healthcare organizations include five tasks as part of their migration plan:
- Map the data: Map out where data resides and identify the various access demands and restrictions that apply. You’ll need a holistic understanding, across all of the teams and partners involved.
- Centralize the data: Develop a single source of truth, so that you can migrate and access your data most efficiently. Be ready to put in this work up front.
- Establish change management: Create a framework for setting expectations, communicating changes, and training staff. Governance is critical.
- Ensure against problems: Carefully consider how to limit the impact on clinical operations, patient safety, and budgets. Many areas in healthcare cannot afford downtime.
- Be ready for problems anyway: Even with proactive planning, you should anticipate and prepare for possible impacts. Establishing consistent alignment up front will help you get things back on track.
“The biggest challenge, especially as you move up in the size and complexity of an organization, is having strong data governance and data management. It’s making sure you know where your data is being moved, what needs to be real-time data, what can be batched – all of those key design considerations that go into making sure that you have the right platform and strategy to manage those cloud metrics,” Reitzel said.
When an organization has done the hard work to align its data governance and management, it can reap benefits beyond the initial migration to a cloud-based ERP solution.
For example, many healthcare organizations are looking for ways to reduce their spending on staff and supplies, which are often their two largest expenses. These two expenses are also critical to the organization’s mission, so there’s no easy way to cut costs. “Those are the two biggest areas that organizations are constantly trying to manage more effectively,” Reitzel said. “But if your data is not right, and your ERP system is not truly integrated and optimized, you’re not going to have the right information to be most effective.”
Once an organization unifies behind an up-to-date cloud-based ERP solution, they will have access to new holistic tools for workforce management and acuity management – “it’s about getting the right people to the right place at the right time and managing those costs more effectively,” Reitzel said.
In addition, the organization can gain a much deeper understanding of supply costs and how they factor into providing care, taking advantage of new solutions and tools for analytics, improved item master and improved integration into clinical systems for charge capture. “All of those add up, but workforce and supply chain are the biggest areas where new cloud-based ERP technologies can truly help improve the bottom line of healthcare organizations,” Reitzel said.
“I actually think that moving to the cloud gives organizations a competitive advantage around mergers and acquisitions, too. It makes them more agile and nimble in how they do business, because it lessens their ongoing capital costs and the investments they’re making in traditional IT activities,” Reitzel added. “Having been a CIO, I know small organizations don’t want a large IT footprint, so they should be proactive and supportive of a cloud environment. For larger organizations, it makes sense on the ERP side as well, and you can see that large organizations have made that move.”
The best solution for all
When a healthcare organization plans its data governance, data management, and other aspects of its cloud-based ERP migration, the key to success is alignment. That alignment can sometimes require a new mindset.
“This is no longer ‘best of breed’ work,” Reitzel says, pointing out that early cloud adopters within an organization might have adopted cloud solutions that fit their needs but do not align with other teams. “Sometimes you will have functions like HCM that have implemented a cloud solution, but it doesn’t truly integrate with its financials, or it’s hard to integrate from a technology side.”
When the organization approaches its cloud-based ERP migration, it needs to develop a holistic plan and ensure it has the right internal investments, support, and scope to succeed. “You don’t want to make these initiatives so large that they die under their own weight and complexities,” Reitzel warned.
As healthcare has experienced mergers and growth amidst the daily pressures of providing patient care, systems have often fallen out of alignment. But, with a move to a modern cloud-based ERP that integrates teams and partners, healthcare organizations can help ensure the highest quality of care with the greatest efficiency.
Advisory Business Consulting Principal
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