Healthcare: How ERP Can Help Save Billions of Dollars

Enterprise Resource Planning (ERP) software is an operations tool that is used by many companies in Singapore today. However, just because a software deals with business operations, it does not mean it is considered as a good ERP software. There are many legacy systems that would not qualify as ERP in today’s scenario.

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So what is preventing them from making the switch?

There are many healthcare organizations who are looking to switch to a better ERP, but find themselves unable to do so. Why? It is not a question of money. They have the resources at their disposal, but healthcare organizations have a lot of critical life-support systems hooked up to their ERP, and any downtime involved with the switch is a risk to the safety of their patients. There is also an ‘unofficial’ downtime involved with users becoming familiar with the new system. Annual healthcare expenses in the United States are $2 trillion, but it is estimated that $330 billion worth of medication is wasted on account of patients not adhering to their medication schedules.

Theoretically, could a better ERP help cut down on this? The answer is not only yes, but it could do so much more – a study involving physicians and features associated with a modern ERP system generated the following results:

  • Hospital costs declined by 13% per admission
  • 44% of physicians were able to do their clinical work faster
  • 52% of physicians felt their work was made easier


Additionally, it was found that an Enterprise Resource Planning system could reduce the length of stay for an inpatient by factoring in advances in medical technology such as robot-assisted surgery and minimally-invasive surgical procedures. An ERP system would also help the administration to streamline their claims process with insurers, significantly cutting down on paperwork. Insurance companies have adopted new ERP systems and according to them, several claims are denied because of outdated codes used by hospitals (these codes relate to diagnosis and treatment). When a claim is denied, a hospital or healthcare institution has two choices – it can either forget about it, or try again, this time doing it right. Not willing to forego valuable revenue, the latter is what hospitals choose to do. But this also involves a significant spending on human resources when a real person has to sift through the claim, figure out where they went wrong, fix it, and do a thorough check to ensure that everything is correct this time to avoid another denial. This manual effort, as you may have figured out already, takes time.

So is there a way out, or are hospitals doomed to be trapped in this vicious cycle? The solution to adopt a new ERP system, but not all at once – the less critical departments can be migrated first, staff can be trained on the features of the new system, and with a bit of careful planning, the new system can be rolled out in other departments as well. The staff would already have been trained by this time, and so near-100% efficiency can be achieved from the very first minute itself.

The savings from using a modern enterprise resource planning system can work out to millions of dollars per healthcare institution, and billions across the industry.

In conclusion, ERP software can help operations in the healthcare sector improve leaps and bounds if the relevant stakeholders are willing to adopt new software given some downtime and inconvenience. They need to see beyond the short-term inconvenience and manpower cost and identify the long-term savings and benefits that the organization can derive from using modern ERP.