The past two years in healthcare is something for the history books, and the year to come will be no less of a challenge. Supply Chain and Accounts Payable have been – and will continue to be – pressured to deliver fiscally responsible creative sourcing strategies to efficiently [and correctly] pay the bills. All this while staff has been cut, supply shortages linger, price spikes continue, and invoice processing is falling behind. Simply put, more is being expected from less.
I have no doubt these challenges will continue into the foreseeable future. The fact of the matter is that we are in a state of existence requiring new: thoughts, attitudes, and practices. Organizations committed to focusing on data-driven processes supported by optimized tools AND investments in people development are the organizations that will not only make it through our current crises but also succeed well into the future. Your organization can be the one that your peers refer to when they discuss “well-run healthcare systems.”
Data-Driven Processes
Procure to pay (P2P) is a complex ecosystem composed of Finance, Supply Chain, end-users, and vendors – many of whom are also dealing with their own internal issues. It is a multitude of intertwined processes that need effective coordination.
Effective coordination of these processes today is being challenged due to staffing shortages, and many individuals still work remotely – perhaps permanently so. A process previously needing five people across three departments, is now operating with three people across three departments.
Processes – informal and formal – that worked previously may no longer be doing so. It is management’s responsibility to identify when teams and processes are – or, are not – operating properly and then work to bring them back on track.
Informal processes may be the most difficult type to manage, as they are generally behaviorally derived. For example, “We usually use POs, but Cliff, our sales rep, really knows what we need. When we lost our departmental buyer due to COVID financial pressures, Cliff stepped up, and he takes care of us when we need more product.” The implications of this statement, from a senior management perspective, are scary, potentially resulting in errors costing our hospitals millions.
As a CEO, I believe the way to manage processes, create new ones when necessary, and make current ones more effective, is through data-driven analytics. I figure if “it works for baseball, it has to work for us.” What does one have to do with the other? ALL organizations are composed of three elements in an organizational triangle: people, processes, and tools. The glue that ties these together IS DATA.
Understanding when to “shift” the batters because the data shows it to be a smart move, is no different from understanding when and where to shift people or products based upon your data.
If done correctly, data analytics provides objective, unbiased insight into how your processes are. Once you understand that benchmark, you’re in a position to manage forward by replacing the status quo, creating more efficiencies, or leaving everything alone. In my opinion, the goal of all this is to create operational excellence and continual, financial improvement. This goal is extremely important today because serious financial constraints still exist.
Optimized Tools
Organizations CANNOT run without tools. The concern I see over and over is understanding what specific output you expect from those tools.
We see health systems spending major amounts of money on tools with the expectation these will magically transform an expensive process into an efficient one. Your tools – both hardware and software – not only need to be appropriate for your health system’s processes [assuming those processes are effective], but they also need to be correctly implemented, operated and managed. Additionally, they need to “play nice” with those other tools interdependently feeding or receiving data. This is especially true when integrating a significant product or software implementation such as an EMR or ERP.
All too often our clients find themselves at a standstill or going beyond a planned “go live” date when updating or converting to a new ERP system. These delays have financial consequences. Delays often happen because the other two components of the organizational triangle – people and processes – are not fully considered and/or involved.
For example, a very robust, appropriate, and expensive ERP that affects many points of the organization can be operationally and financially inefficient because the people expected to operate that tool don’t know how to fully utilize its capabilities. Decision-makers must consider the organizational cost of an ERP system operating at 80% efficiency. Note, if you can’t quantify the cost, then perhaps you need to reexamine your affected processes?
Non-optimized tools can lead to training issues, staffing issues, or process issues. Any one of those issues that are operating inefficiently will create a financial burden upon the organization.
For example, a backlogged invoice payment process due to an AP department being short-staffed, not properly trained, or not motivated, will lead to end-user inefficiency and financial loss because of the time spent listening and reacting to “their” vendor repeatedly calling and emailing to get their invoices paid. This time is expensive. Departmental time communicating back to AP to “pay the darn invoice!” is expensive. The extra time and effort spent with the AP department manager telling the processing clerk(s) to “pay the darn invoice” is expensive. The cost of a duplicate payment made because the invoice had been paid yesterday and is now being paid again due to the clerk overriding the ERP controls to do what the manager said, is expensive.
Investment in People
In my opinion, the greatest threat to your organization is not providing ongoing training to your personnel. Today’s workforce is smarter than any previous workforce in history, which is good for your organization IF you can tap into that brainpower. If you do not tap into these assets, you will be spending resources on workers getting bored, feeling underutilized, and being underproductive. The net result is your employees may make a lateral move to a different organization that pays the same amount but is perceived as communicating and investing in a better future for them.
We see many highly recognized and respected health systems with significant training capabilities supported by HR. While I’m sure it is due to resource constraints, these internal development assets are generally not made available to anyone below the department manager positions. Those lower in the organizational hierarchy are deemed able to “learn” their job and responsibilities from peers or supervisors. However, by not tapping into the large volume of intelligence residing in the “lower” levels of your organization, not only are you doing a disservice to your employees, but you are also preventing your organization from being all that it can be.
My recommendation is to provide continual learning sessions to all your people on the value of “thinking” not just doing (remember the term “CQI” from a few years ago?). Empower your employees at all levels to interpret data to create efficiencies that impact the bottom line. Teaching not only how to fill out a form on a computer screen but teaching them WHY this is important, HOW it affects others’ actions, WHAT the purpose is (at a peer and departmental level), WHAT the expectations are, and WHY they exist.
For example, change the function of AP clerks from that of transactional invoice processors – computers can do that faster and cheaper anyway – to that of invoice payment process analysts. By empowering them to think about how invoices can be processed correctly, better, and faster, you will create an electrical storm of firing synapses and gaps strong enough to pay your utility bills! I’m actually not kidding on that statement. Getting your people thinking about continual process improvements will result in total organizational savings that far exceed your current utility bills.
Give people a reason to be more, they will.
I can’t tell you how many times we’ve spoken to your lower-level supervisors, managers, and line people about process issues that seem to be inefficient. Their response, more times than not is, “Yes, I know but I can’t do anything about it.”
Providing ongoing people development is essential to keeping your employees motivated, allowing them to build skills to perform to their highest potential.
In many instances, these changes require a culture shift. To create efficiencies and develop loyal employees, focus on your people, processes, and tools. These should be priorities for leaders in 2022.
TAG’s mission statement is, Helping Hospitals Save. We have done so and we will continue. However, you as leaders of your organizations and your industry, need to seize the opportunities before you.
Sincerely,
John Weiss, Jr.
CEO, TAG, Inc.
