Healthcare executives ranked patient accounting and patient management software fourth lowest and financial/ERP systems eighth lowest among all 24 software market segments, according to the 2008 Top 20 Best in KLAS Awards: Software & Professional Services report. Additionally, financial implementation ranked second lowest among 10 service market segments, beating out only IT outsourcing.
Analysts and consultants say that purchasing administrative and patient accounting systems has taken a back seat to upgrading clinical software for the past five to seven years. Now, as many hospital executives turn to upgrading financial systems that may be more than a decade old, they are placing greater value on integration of the financial and clinical systems, and are looking at business intelligence software to help with analytical efforts. But relatively few so far have been able to bridge those islands of clinical and financial data to allow for enterprise analyses of pay-for-performance programs or Centers for Medicare & Medicaid Services outcome measures.
What follows is a breakdown of the four main financial/administrative segments in the KLAS report, with comments from CIOs, analysts and consultants about their experiences.
Customer satisfaction has traditionally been quite low with enterprise resource planning (ERP) solutions in healthcare, and this still holds true today.
“There is a general feeling that the mainstream ERP vendors don't put as much energy into support as do the other healthcare-specific software vendors hospitals deal with,” says John Salcedo, research director for financial systems at KLAS, based in Orem, Utah. For ERP vendors, healthcare is really a different beast than the other vertical industries they deal with. For those industries, the ERP system is the core IT system. In healthcare, the clinical software is the main system, he adds.
That is one explanation why CIOs tend to feel more comfortable with McKesson (San Francisco) in this space, Salcedo says. They know the company is focused on healthcare, and they may have had a good experience with its other offerings, such as PACS systems. Its Pathways ERP software is integrated with other McKesson solutions. “CIOs tell us they appreciate that McKesson can leverage its existing relationship with hospitals,” Salcedo notes. “Vendors such as Oracle (Redwood Shores, Calif.) and SAP (Newtown Square, Pa.) don't have that luxury.”
Besides McKesson, which won a 2008 Best in KLAS award in the Financial/ERP category, and Oracle's PeopleSoft Enterprise Financial Management, a leading player in ERP is Lawson Software (St. Paul, Minn.)
Marc Holland, research director for Health Industry Insights in Framingham, Mass., describes Lawson as a dominant player in the market because it's perceived as being priced more reasonably and easier to implement. “But none of the vendors are seen as sufficiently robust in professional services,” he adds. “These systems are complex. It doesn't help if a vendor comes in and sets up the files and says lots of luck.”
The hospitals are wrestling with getting the most value out of these applications, he notes, yet they are reluctant to engage consulting firms because of the cost that adds to the implementation.
Tight project funding does contribute to the implementation woes, agrees John-David Lovelock, a research vice president in Stamford, Conn.-based Gartner's Technology and Service Provider Research group. “You get the amount of service you contract for, and hospitals are facing many budgetary challenges,” he says, “so they request the lowest possible price and take a lot of the work of integration on themselves.”
Lovelock sees hospitals continuing to lean toward vendors that focus on healthcare, such as Lawson, Meditech (Westwood, Mass.) and McKesson. “The strength of SAP and Oracle/PeopleSoft in other industries just hasn't translated to healthcare yet,” he adds.
Thomas Pacek, the CIO of South Jersey Healthcare in Bridgeton, N.J., recently participated in an ERP product selection committee and is now heading up a Lawson implementation for the two-hospital system.