Cloud technology is relatively old, considering the pace of innovation in the back office. However, that doesn't mean every business has taken this seemingly basic first step in digital transformation. The healthcare sector is particularly challenged when it comes to upgrading back-office systems, yet cloud-based enterprise resource planning (ERP) systems are an increasingly attractive target for digitization efforts among hospitals.
According to experts, the digitization of patient health records opened the door for broader digitization in hospitals' back offices, but their strategies for taking on this initiative differ. The latest research from KLAS in its "ERP 2019: Performance in the Cloud" report found that decision-makers at healthcare providers, including directors and managers, agree that migrating ERPs to the cloud yields convenience, system reliability, enhanced security and broader efficiencies.
"In the traditionally stagnant market of ERP (HR, finance and/or supply chain), aging, on-premise solutions are giving way to several cloud options now on the table," KLAS stated, according to RevCycleIntelligence this week. "Given the significant lift required to move to a new ERP system, many organizations contemplating the cloud are taking the opportunity to consider all vendors, not just their incumbent."
That conclusion presents a market opportunity for ERP providers that can address the unique requirements of healthcare industry solutions. Indeed, KLAS noted that the success of a hospital's ERP cloud migration is significantly related to the vendor it chooses, and that supplier's ability to support integration and migration efforts, as well as support internal staff and limit ERP downtime.
"Product success is often heavily influenced by implementation quality," the report said. "While the vast majority of interviewed organizations ... used third-party implementation services, they still expected a certain level of support from their software vendor."
Research as recent as March 2018 has suggested that fewer than 5 percent of businesses across industries have fully migrated their ERPs to the cloud. However, hospital experts have agreed that solution providers are beginning to focus on providing that customer support that companies need.
"The vendor community is moving that way," said Children's Mercy Kansas City Chief Information and Digital Officer David Chou in an interview last year with HealthTech Magazine about ERP providers' support of shifting hospital clients "out of the data center business and ... into the public cloud — and then into the private cloud."
Earlier research from 2016 found that significant hurdles remain for the hospital sector, as companies struggle to decide where to play crucial funding available. According to Black Book's report, fewer than 29 percent of hospitals in the U.S. at the time had implemented an ERP product, with the healthcare ERP market growing less than 2 percent in 2015.
Today, that's changing.
"The back office has been neglected, but it' come to the forefront now, and there's a big influx of investment," said Chou.
Yet, as hospitals ponder which vendors can support a frictionless migration of their ERPs to the cloud, and provide the on-site support that companies require, there is an increase in hospitals that are considering entirely outsourcing ERP. Recent Black Book analysis, published last year, found that 94 percent of hospitals are considering ERP outsourcing in 2019, an 85 percent increase from 2015 levels, pointing to pressure to boost cost efficiencies as a key factor behind this trend.
At the same time, other analysts are looking at high-tech solutions to promote cost efficiencies for hospitals via their ERP systems, with Evans Data Corporation finding in its own recent analysis that the majority of healthcare ERP developers are working with artificial intelligence (AI) technologies, and 80 percent expect AI or machine learning to eventually replace the ERP outright. According to Healthcare IT News, hospitals should keep a close eye on the technological development of ERP solutions as they move forward in the digitization process.
"Now that electronic health records have, for the most part, been universally adopted in the U.S., enterprise resource planning is the next top to-do for many hospitals, and artificial intelligence is likely to be a big part of it," the publication stated.