Transformations in Healthcare’s Supply Chain Strategy

In a 2024 IDC survey, 35.5 percent of healthcare IT leaders said they were planning to make further investments in their supply chain systems in the coming year, with an additional 14 percent looking to invest in new systems.

Although there are obvious ROI advantages for supply chain investments, the benefits reach much further, he says.

“A lot of people look at supply chain in an almost disconnected manner from the clinical side of the hospital, but actually they’re very interrelated,” Shegewi says. “If staff members can’t find what they need to accommodate patients or a bed goes down, they’re going to get frustrated, impacting the experience for patients and staff alike. It becomes a cycle. Operational issues do not exist in a vacuum.”

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How an ERP Solution Can Help Simplify the Supply Chain

OU Health was an early adopter of the Workday supply chain management (SCM) module, which the health system began using in 2019, before Bakelaar was hired (the cloud-based platform also has modules for HR, planning, finance and operations). “I think we were customer No. 7 for the SCM functionality, but we weren’t using Workday to its fullest capabilities,” he says.

One of the issues was that the supply chain team used a third-party program to interface between Workday and OU Health’s electronic health records system for charging patients.

“As part of our transformation, we implemented Workday’s hand-held scanning technology for ordering and got rid of the third-party solution. Then, we had our existing EHR do the charging,” Bakelaar says.

He’s a strong advocate of keeping processes as simple and streamlined as possible.

“I think of our supply chain as a three-legged stool,” Bakelaar says. “We have Workday, which is our ERP, we have our primary distributor that we get the majority of our supplies from, and then we have our group purchasing organization. Those three legs are what we try to leverage from a technology, process and workflow perspective. We do our best not to add more technology, interfaces or systems unless it’s for one of the three legs of the stool. We find that additional technology and integrations just add a lot of complexity.”

Bakelaar also advises health systems to re-evaluate their workflows if they don’t fit neatly into an ERP solution.

“I think the mistake people continually make is that they want to change the technology to fit their business process. Changing business processes is hard, and telling a vendor to change their software can be much easier,” he says. “But I’ve always taken the position that it’s better to change the business process. It’s a good opportunity to evaluate processes and work teams.”

Finding Supply Chain Efficiencies During a Healthcare Merger

Healthcare mergers can often introduce unwieldy processes, but when Corewell Health emerged from the integration of Michigan-based Spectrum Health and Beaumont Health in 2022, the newly formed health system earned the No. 2 spot in Gartner’s 2023 rankings of the top 25 healthcare organizations in supply chain management.

Combining warehouse management systems and ERP integration were key to Corewell Health’s success.

“We had to resolve a lot of issues before we went live with our ERP system, and our success was driven by the prep work,” Director of Analytics Danish Abbasi says. “Our primary goals were to ensure that patient care was not impacted, realize a smooth integration and improve processes, and we achieved that together as a team.”

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Senior Vice President of Supply Chain Andrea Poulopoulos agrees.

“It has definitely been a journey over the past couple of years,” she says. “Our legacy teams did a great job working with one another to reach application selection consensus. As a result, we’ve been able to eliminate redundant technology, reduce cost and drive workflow efficiencies.”

Corewell Health uses Workday for many of its supply chain management processes, and it has added solutions from Tableau for data visualization to focus on data-driven decision-making. As a major indicator of success, Corewell Health’s [pending vendor payments have decreased from $30 million to $14.6 million, improving supplier relationships.

Poulopoulos has advice for combining two organizations’ IT systems.

“You need to remove your biases during the technology assessment process,” she says. “We had to be very objective when evaluating solutions. It wasn’t a matter of deferring to best-in-breed technology. We had to be good stewards of the organization’s dollars and determine what we needed.”

How an ERP Platform Offers Certainty and Savings

At California-based John Muir Health, Controller Jeff Smith was part of the digital transformation team that implemented Workday for the 6,400-employee organization.

“We needed to leverage an ERP system to replace our old, antiquated system,” Smith says. “We chose Workday for a number of reasons, but mainly because they understood our needs. We thought Workday would be a good partner.”

John Muir Health went live with the supply chain module in 2019. About a year later, Smith says, Workday was saving the health system about $3 million per year between licensing costs from the old legacy system and more efficient staffing.

“And there are more nonquantifiable indicators as well,” Smith says. “Everything has sped up. People can submit requisitions using hand-held devices and get those approved and processed. It has reduced the number of emails and phone calls, even those that just ask, ‘Where’s my stuff?’”

When choosing and implementing an ERP solution, Smith also recommends keeping an open mind.

“It’s important for organizations to realize that even though they’ve always done something one way, there be more efficient ways,” Smith says. “You need to accept the adoption curve, knowing that that there will be changes in the first weeks and months, and communicate that so it’s not so scary to people.”

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