Hospital Materials Management Information Systems [Part 1]

Posted on January 7, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

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Fundamentals of Inventory Software Selection

By David J. Piasecki; CPIM

By Hope Rachel Hetico; RN, MHA

By Dr. David Edward Marcinko; MBA

The singular focus of any Hospital Materials Management Information System (HMMIS) is to deliver significant improvements in the ability of hospital facilities, networks, and other healthcare organizations to optimize the processes and work flows associated with materials management systems and reduce the costs related to inventory, durable medical equipment, pharmaceuticals and supply chain management (SCM).

Understanding Strategies

Strategically, hospitals must exploit contemporary technologies and connectivity with suppliers and trading partners to:

  •  improve patient care and safety,
  •  increase efficiency,
  •  drive down costs, and
  •  optimize inventory levels.

Software Selection

Software selection and implementation services have become big business for consulting firms as well as the software vendors themselves.  Even with outside assistance, selecting the right software for hospital operations and having a successful implementation can be an extremely difficult undertaking. Horror stories of failed enterprise resource planning (ERP) system implementations are unfortunately very common.  Anyone who frequently reads business publications have read stories where large healthcare corporations, posting smaller than forecasted profits, cite problems associated with the implementation of a new software system as one of the causes.  Whether these claims are legitimate or not is up to debate. What is true is that hospitals are highly dependent on information systems and failures in the selection and implementations of systems can result in anything from a minor nuisance to a complete operational shutdown.

Those unfamiliar with business inventory management software should be prepared to be bombarded with acronyms and buzz words.  E-business, web-enabled, E-procurement, E-fulfillment, E-manufacturing, collaborative, modular, and scaleable are just a sampling of the terms used to describe (sell) hospital software inventory products.

Inventory Tracking Software

Healthcare enterprise inventory tracking software with implementation ranges in price from a few thousand dollars to millions.  In fact, up until recently, if you were a medical clinic with annual revenues of less than $200 million, many of the top enterprise software vendors didn’t even consider you a potential customer.  Fortunately, this arrogance has been tempered recently due to economic conditions (primarily the software vendors’ cash flow). Unlike five years ago, when the software vendors felt they held all the cards, today it is truly a buyer’s market. No matter how big or small an entity, many vendors will be vying for software dollars. That’s the good news. The bad news is that you must sift through all these products to find the one that best meets your business needs.

Process Definition

The most important part of the software selection process is defining the processes within your health organization and determining functionality that is critical to your medical operation.  Many times clients get distracted by the bells and whistles and forget about their core healthcare business functions.  As a healthcare entity in the DME distribution fulfillment business – focus on functionality related to order processing, as well as warehouse and transportation management. Be wary of the software vendor that claims packages that work equally well in all environments.  Most software packages are initially designed with specific situations in mind; asking the vendor about their biggest customers will often give you an idea as to the type of operation the software was designed to work in.

Product Functionality

When you look at the detailed functionality of a product it will be important to have listed detailed functionality requirements of your healthcare operation.  This is where hospitals often make mistakes by emphasizing functionality that they currently don’t have, but would like, and overlooking core healthcare processes that their current system handles well.

Example:

For example, if you are awestruck with functionality that allows remote access to a medical charting system from an Internet browser on an ambulatory device – and as a result – overlook critical functionality related to order entry or demand planning, you may end up with a system that provides great visibility to the fact that patient revenues are failing. Never assume a software package “must” be capable of handling something considered a standard function.  Some examples of detailed functional requirements are as follows:

  • E-commerce capabilities
  • Multi-facility demand planning
  • Postponement and configure-to-order functionality
  • Forecasting and demand planning
  • Back-order processing
  • Lot or serial number tracking
  • Forward pick location replenishment
  • Batch or wave order picking
  • Returns processing
  • Back flushing DME inventory
  • Co-product processing
  • Outsourcing specific operations
  • Multiple stocking units of measure
  • Product substitutions
  • Blanket orders
  • Shipment consolidation
  • Multi-carrier rate shopping and manifesting
  • First-in first-out processing

documents

Assessment

Don’t settle for “yes, we can do that” responses from the software vendor. It’s your responsibility to verify that not only can they do it, but also that they can do it to the level required. Ask detailed questions as to exactly how it works in their system. Look at the specific programs used to achieve the task and verify that the data elements required to achieve the task are present. Don’t allow the software vendor to sidestep your questions by retreating into obfuscating technical jargon

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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