Is More Expensive Better? Or Just More Expensive?

By John Freund

Why is the software being sold into hospitals so expensive? Why’s it so complicated? Why does it take years (and often hundreds of thousands of dollars) to implement?  And hang on, here’s my impression of Tom Hanks in the movie Big – “I don’t get it. What’s so fun about that?” It seems like software is being developed by vendors with a goal of greater complexity and as a result, higher price tags. But are these solutions better? If you’ve had a stock-out in the past year, or if you’re overstocked with products that are expiring, or if the nursing staff shoot dart guns at your supply techs as they restock the store rooms, the answer is no. These systems aren’t better.

The problems you’re having start with the basic functionality of systems that don’t support effective processes, grow exponentially in the midst of “new and enhanced” complexity, and peak with crazy-high software prices, consulting fees and implementation time similar to an elephant’s gestation period.

So ask yourself, “What’s all that complexity actually doing for me?”

The good news for hospitals is that while the supply chain you manage is extremely important – patient care depends on it – it’s not as complicated as a manufacturer’s supply chain, for example, which has to manage upstream, all the way to the suppliers of raw materials, with high degrees of global complexity. Hospital supply chains need to manage supplies. So your goals are to ensure every product that’s needed to deliver care is where it’s needed, when it’s needed for your clinical team. Then you need to know, how fast you’re using it, how long it takes to get it and when to reorder it, for your supply chain practice.

When you have these data points, you can manage inventory. And most importantly, you can manage it correctly, eliminate stock-outs, reduce overstocking and waste, and eliminate hoarding and maverick spending.

The answer to the problems you’re having isn’t to build on more complexity. Instead it’s to simplify with solutions and processes that actually meet your inventory management needs. For example:

1) Demand better, smarter solutions at a lower price point. Pay less for an inventory management solution designed specifically to support and improve your supply management processes, whether your approach is using PAR, 2Bin, a limited access system, RFID or a combination.
2) Ask your vendor to set realistic expectations about how long implementation will take, and find one that can deliver in weeks (or maybe months), but not years. 
3) Make sure you have a path to deliver real ROI to your organization quickly, with low up-front costs, quick speed to go-live and rapid staff adoption, and support of lower-cost, smarter business processes. 
4) Reporting is key. You need reports that actually recommend the action you can take and point to cost reduction opportunities. 

With the right approach, the answer to the question “What’s so fun about that” could be that everything is working the way you intended, the price tag for the solution you need falls into a range you can afford, and you can quickly implement and adopt new processes, without an army of consultants moving in with you. ROI on big system implementation is years, and that’s if you actually get there. Reset the time-to-value expectation in your organization and then get started with simpler processes that work.