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Consolidation in the healthcare industry has been on the rise, with mergers and acquisitions leading to larger healthcare organizations that are attempting to leverage economies of scale to deliver healthcare at lower costs. Over the past several years, healthcare “mega-mergers” have been the trend, with the largest healthcare providers combining such as Dignity and CHI, Provide and St. Joseph’s, Advocate and Aurora, Bon Secours and Mercy – to name few. As healthcare organizations grow in size, the need and opportunity to create operational efficiencies increase, and ERP shared services for back-office functions are seen as a way to achieve these goals.

A challenge in ERP shared service models is to provide the same level of service that would be received in a de-centralized business environment while still delivering the expected cost efficiencies. Unfortunately, not all shared service centers succeed in providing a high level of service, and local hospital staff complaints are common.

Even if the business case is clear, transitioning to an ERP shared service environment is a significant cultural challenge for any organization. It is vital that before embarking on this journey, that the company is fully prepared to embrace the process. In part one of this two-part blog post, we will examine three critical success factors for any shared service operation.

Executive Support

Executives must be firmly behind the initiative and understand that at times, the transition will represent a significant cultural challenge. Processes will be changed, and local leaders may be resistant to the reduction in their level of direct control in the future. Jobs may be lost or relocated as part of the financial business case and as a result of the shift in responsibility to the ERP shared service center. While company leadership may agree with the initial business case and actively support the logic of the change, there is a risk that the support may waver if resistance occurs. Right from the start, leadership must fully understand the implications of the shared service decision and be prepared to support and defend the model publicly.

The Right Technologies

ERP Shared service centers perform common transaction functions such as accounts payable, purchasing, and payroll. Automation Technology is vital to creating an efficient and scalable operation for these functions. Without the right technologies, a shared service operation will require constant additional resources as volume increases. As an example, for an accounts payable shared service operation, document imaging is vital for success. Imaging provides visibility into invoices accessible centrally and locally, reducing calls to the AP department. Workflow is also essential, whether inside or outside the ERP solution, as it allows all invoices to be received in a single location and routed locally to the appropriate approvers. Shared Services EDI and data capture, as well as invoicing,  will streamline invoice entry, allowing for invoices to be processed faster, discounts to be captured, and reducing risk of a backlog. Electronic payment methods not only streamline the payment process but also may provide an income earning opportunity for the AP operations. Choosing the right mix of technologies and implementing these technologies properly to create a fully integrated and streamlined AP model would be a key component of the success of a shared service center.

Strong Customer Service Model

The success or failure of a shared service center will ultimately be judged on the quality of service that it provides to its internal and external customers. As an example, a purchasing shared service center would need to respond quickly and efficiently to requests from departments about the status of orders.  Failed customer service models can lead to late payments, vendor credit holds, and angry employees. A world-class shared service department focuses on providing excellence in customer service. The first step to treating customer service as a priority is establishing a dedicated customer service function staffed with team members selected for and trained to enhance their customer service skills. Service level agreements should be established to create clear expectations. Customer service must be accessible, allowing for contact via phone, email, and live chat. Staff must be empowered with clear instructions, but the ability to make judgment calls and have the authority to follow up with purchasing, approvers, or other parties. Call tracking software should be used to monitor call volume and to ensure follow-up. Customer service metrics and reports can be used to better understand actual performance compared to service level agreements.

Properly designed, ERP shared services creates significant cost savings – but also can provide a high level of service and help improve the quality of the healthcare organization. Following these key success factors is the first step on the path to becoming world-class.

Be sure to look for part two of this blog series on June 27, 2019, and don’t forget to register for the upcoming free 30-minute webinar about creating a world-class shared service center in healthcare on July 9 at 1 PM EST.

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Brian Rosenberg

ERP Strategist

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