Digital Transformation: Tech Challenges For Healthcare Modernization

By Alex Saric, Ivalua

The healthcare industry is in the midst of a dramatic digital transformation, marked by a host of new back-end technologies that promise to modernize hospitals and lay the foundation for a truly digital workplace in the year ahead. Hospitals and healthcare systems are challenged with striking a delicate balance between running a smooth, efficient operation while remaining flexible and devoted to patient care in a modern age. This creates significant procurement challenges, requiring hospitals to embrace new technologies and innovations at a seemingly breakneck pace while also keeping an eye on the bottom line.

To maximize profits while optimizing patient care, healthcare providers are increasingly turning to digital technology solutions. In 2017 margin-eroding pressures squeezed providers on all sides. In 2018, it is more critical than ever to create and sustain significant efficiency improvements and enable deeper supply chain collaboration through strategic deployment of enterprise-wide management platforms. Given the constant evolution in regulations and business models, technological agility is a critical requirement.

Because healthcare is increasingly data-driven, much of that data is heavily regulated for both privacy (patient records) and transparency (costs and value of services provided), healthcare providers should ideally have exemplary data governance systems in place. However, far too many healthcare systems are dependent on spreadsheet-based tracking, manual processes, and disconnected reporting structures. This also applies to supporting procurement and supply chain systems covering the source-to-pay process.

Without end-to-end data governance and spend management solutions, healthcare providers don’t stand a chance of keeping up with the requirements of HIPAA, the Physician Payment Sunshine Act (PPSA), and similar ACA standards. As enforcement shifts unpredictably in practice and focus, healthcare providers are compelled to prepare by developing best practices in risk management and data governance. Streamlining business processes throughout their supply chain is the only way providers can expect to maintain compliance, stay competitive, and provide high quality services.

Now that corporate technology and finance giants like Amazon, JP Morgan, and Berkshire Hathaway are entering the healthcare market, the pressure to digitally transform is even more intense. As the industry scrambles to figure out what this unprecedented move means, one thing is clear – the need to ensure quality services at competitive prices will only intensify.

Through our work with clients, we’ve identified six major areas where healthcare providers will need to face challenges and find effective solutions. Each holds significant implications for procurement, including opportunities to control costs by optimizing the source-to-pay cycle.

Establish Data Standards

Whether it be medical records, insurance claims or personal payment information, a lot of highly sensitive and heavily regulated information flows through healthcare providers’ systems. Cyber-attack outages, breach notification and penalties, public trust, and even patient safety are primary concerns. Protecting the privacy and security of data is only possible when it is properly governed. For these reasons, and to optimize business processes, providers must focus on formalizing master data governance, establishing data standards and policies to sustain quality. Deploying best of breed tools to facilitate de-duplication and error checking helps reduce costs and risks and enhances buying power. Clean data is fundamental to digital transformation.

Regulatory Burden

To meet the ACA requirements that 80-85 percent of all premiums are spent on healthcare services and activities, providers must mature their spend management capabilities, from tracking to reporting. Risk, supplier and contract management tools help providers ensure compliance and avoid paying associated rebates and penalties (as required by PPSA).

Explore New Models To Minimize Risk

Waves of convergence continue to disrupt the business and operational models of insurance firms, pharmaceutical companies, and health plans. In turn, healthcare providers end up absorbing more risk. The transition to fee-for-value models is intended to drive down healthcare costs on a national scale, but new models and structures will only be beneficial to providers if they enhance spend visibility and execute strategic sourcing initiatives. Healthcare systems can reduce their operational burden by streamlining procurement processes and deploying intelligent, automated solutions across the enterprise.

Horizontal Integration

Rising patient expectations for a more coordination continuum of care continues to increase. One common response is for hospitals to acquire physician practices, diagnostics centers, rehab facilities, home care services and wellness companies, which increases the level of data governance and operational harmonizing work to do. Consolidating services, prioritizing programs, and leveraging increased purchasing power into more competitive contracts will require tools that can punch through data and reporting silos. Deploying a unified, streamlined source-to-pay process will minimize the role of disparate managers and clinicians in transactional procurement activities and maximize compliance and auditability.

Alternatively, some providers are collaborating more closely with suppliers to provide more comprehensive service offerings. Technology platforms can enable the deep collaboration required.

In case, enterprise-wide data governance and visibility is paramount to realizing hoped for efficiencies, buying power, and cost reductions.

Full Suite Offerings

Healthcare customers, particularly Millennials, increasingly prefer one-stop-shopping. While healthcare providers may seek horizontal integration opportunities to achieve economies of scale, patients want convenience. They demand predictable pricing and clear, coordinated billing and claims handling. In the era of patient-centric healthcare, they have choices and are increasingly savvy about exercising their options. To successfully deliver services that satisfy customer expectations and meet high standards of patient care in an efficient and cost-effective manner, controlling providers will have to evaluate key processes for risk, establish operating rules, and optimize the order-to-cash cycle across all associated services and programs.

Exact Master Data Governance

The healthcare business is massive and convoluted, and growing more so through convergence, legislation, and population pressures. Supply chains are complex, ongoing M&A activity is disruptive, medical technology (e.g., IoT devices, mobile health, telemedicine) introduces unprecedented risk, and critical system implementations are notoriously replete with pitfalls (ERP upgrades, anyone?). Healthcare providers hoping to cement efficiencies, succeed with digital transformation initiatives, and achieve excellence in patient care and customer service should start by focusing on master data governance. Assess the state of master data across various domains (item, vendor, customer) and define cleansing and enrichment rules that will drive enterprise-wide standardization. Deploy a robust governance model to continuously improve data quality. The results are worth the effort: visibility across the value chain, better sourcing decisions, maximized buying power, and streamlined compliance.

In today’s unpredictable environment, healthcare providers require a powerful combination of capabilities and the agility to respond to constant change and evolving requirements. A smart procurement strategy can help by automating routine processes, easing access to medical supplies, providing all the data needed for timely and accurate ordering, and expediting spot buys. Developing granular visibility through comprehensive, clean data ultimately strengthens supplier diversity, regulatory compliance, spend control, and revenue cycles.

About The Author

Alex Saric is Chief Marketing Officer of Ivalua, a global provider of spend management solutions and a recognized leader in procurement, sourcing and supplier risk management.