Integration Of ERP In Healthcare Sector Essay


Discuss about the Integration Of Enterprise Resource Planning In Healthcare Sector.



Business process refers to the organization's activities used to accomplish the set goals. The business management is the systematic approaches used to improve the processes. The last decade has brought a lot of change to business management software. Businesses have considered different software needed in their operations. The enterprise resource planning software is one of the changes that was developed and adopted in different aspects of the organization, including the healthcare sector.

These changes have seen many organizations starting to use the terms accounting information system and enterprise resource planning interchangeably. Though there is a big differences between the two and understanding them can help one use them appropriately. The enterprise resource planning system is system information required to integrate the business transactions and processes in an organization. The system is accepted universally to achieve integrated enterprise information system (Wickramasinghe & Karunasekara 2012, p. 879).

The healthcare services have also tried to improve their services globally, and include the role of information technology to come up with solutions for various challenges and problems facing the healthcare sector. The information technology discipline encompasses all the industries in the market, and it includes the healthcare (Helfert 2010, p. 948). The paper focuses on how enterprise resource planning systems ERP such as SAP to be used in the health facilities and how it can be integrated to improve the services offered in the healthcare sector.


The organization adopts the ERP system in order to achieve their administrative and managerial goals. The ERP introduced in the healthcare sector would enhance important changes in areas such as the finance, capacity and human resource in the organization. It could lead to improvement in profitability and services offered by the healthcare organization. For organizations to reduce cons and improve the services offered to customers, they use the ERP system (Agarwal & Garg 2012, p. 162).

Integration of the ERP system in the healthcare

According to Stefanou and Revanoglou (2016) there are different types of ERP system integration which include the healthcare processes;

Business process integration; It serves as the computerized process system for the financial, administrative and clinical functions of the healthcare facilities.

The non-ERP applications poroces; it involve the integration of the patient relationship management systems, laboratory information, archiving and communication, operation theatre system and clinical decisions support system.

Web-based application and system integration; the third form of integration involves integration among different healthcare facilities, E-procurement of medical supplies, insurance, telemedicine, pharmaceutical industries, physicians and e-learning services.

Mobile device integration; mobile device integration is the last form of integration of ERP system in provision of the healthcare service, which takes into the mobile healthcare system and telemedicine. It is very important for the healthcare organization to have access to information as they depend on the information provided to offer services to the patients. The ERP help streamline the processes of the organization which helps the healthcare to manage and controls different departments as the information is readily available. It is also known for cost reduction (Woodside 2017, p.182)

Advantages of ERP system in Healthcare sector

The introduction of ERP system in the healthcare sector would lead to numerous benefits to the facilities. Discussed below are some of the advantages that the healthcare facility would gain with an introduction of the ERP in their system.

Operational costs

Information transfer is automated reducing the human interferences in various tasks they perform. The ERP systems also reduce the required workforce to manage patients’ registration, discharge, billing, and transfers. These cost saving help improve efficiency and productivity. The most significant reasons for most facilities implementing and the ERP system is to reduce cost, centralize data, storage accessibility by all departments and provide an opportunity for redesigning practices. The workers can spend most of their time attending to patients, and it also reduces the cost of care. The ERP system helps the organization to carry out its processes effectively, for example, filling orders. It is also significant to the improvement of the business process (Hendricks, Singhal, & Stratman, 2012, p.79).

Quality of service offered.

The ERP system provides information on the billing and medical knowledge to its users in the organization and the stakeholders. Kahraman, Beskese, and Kaya (2010, p. 558) add that the use of IT in the healthcare sector is driven by the need to provide quality services to the patients, be competitive in the healthcare area and enhance the personalized personal health. Adoption of the ERP system in the provision of healthcare services would lead to smooth operation of activities in the facility making it easy for service providers to provide services without frustrations. The transmission of information between the service providers would be easy and speed up the rate of attending to different patients.

Improved efficiency in the healthcare facility operations

Formerly, the healthcare sector only used information technology for billing and accounts purposes. However, the improvement of technology has resulted in improved efficiency, keeping track of the supply chain and inventory, reducing the costs and taking care of patients (France & Wilson 2016, p. 16). The departments handle different information from different departments and integration of these data is key to the organization and the quality of services offered to customers. According to Miller and Sim (2014, p.120) physicians, clinicians, nurses and managers in the healthcare need quality tools and technologies to cope with the different medical technologies and methods coming up to provide quality healthcare services. The use of ERP would enable the healthcare sector to handle a lot of information they use when carrying out their duties (Grimson & Hasselbring, 2010, p. 52). The aging population and another form of diseases coming up require multiskilled services in the healthcare sector (Helfert 2010, p. 948). With different stakeholders involved in the management, ERP system is significant to the operations.

Integration of departmental data

Healthcare service providers use data from different departments in organization, and they must be shared by different departments in order to provide the required services. Each department uses the information differently due to having different functions for example controlling and planning. Therefore, making the data available and accessible to the necessary departments at the right time is important. The information is significant in the healthcare system, for example, to performing tasks such as patient’s home care, physicians, and chronic care, the correct information is needed. Hence the use of ERP to integrate of different processes and services would be beneficial to the healthcare organizations characterized with traditional segregation of the processes where information was not shared. The integrated system allows the organization to support and coordinate the patient care efficiency. Furthermore, Shehab, Sharp, Supramaniam, & Spedding 2014, p. 382) stated that system such as ERP can be used to have automated information system to meet the demands of the quality of healthcare services. Combining all elements into a single system is beneficial in improving the operational efficiency of an organization as they rely on different sources and entities to carry out their duties.

Easy accessibility of data/information

The ERP system allows an organization to access information about the entire organization and gets the information needed to influence the operations of the healthcare services offered. According to Lee and Kwak (2011, p. 269), finding information in an integrated software is easy and time saving. ERP is divided into three types: packaged software which is tailored towards the industry sector, generic form software targeting specific industries and lastly the configured package software used in the operational installations which are individualized according to the specifications and requirements. The healthcare organization can have ERP designed specifically to meet their needs and requirements. It can be presented in a way that data is easily available for different specialties as per their own requirements. For example, specialists such as physicians, managing one patient need collaboration requiring easily accessible information about the patient.

Therefore, healthcare organization can use ERP system to facilitate administration of services by accessing ERP system information in different locations (Padhy et al. 2012, p. 152). In the health fraternity, being able to access medical information is critical to becoming efficient and effective. Healthcare organizations handle large data and their inability to share it leads to operating effectively or cost reduction and affects the time they take to handle various data within the organization. All healthcare organizations aim to improve its services and operations. A prudent decision-making system, ability to monitor and control information is required for a dynamic business such as the healthcare organization.

Areas where of healthcare sector use ERP systems in the organization

ERP system is integrated into four departments of the organization where they are required;

Front Office- It provides patients and families with updated information, and it is a very significant component of hospitals. The front office workers always have information on appointments, specialized services, doctor’s schedule and the availability of beds in the facility. The use of ERP system allows efficiency in the organization as everyone responsible for patients can access this data whenever they need it avoiding wastage of time. It also leads to easy and effortless operation of the front desk (Staples & Niazi 2017, p. 1432).

Financial management- The ERP software helps identify solutions for cost-cutting, reduce risks and anticipation of results, improve managerial reports and manage these in an informed and improved manner. It allows the healthcare organizations to improve the management and integration of numerous financial processes.

Inventory Management-It is one of the most conspicuous features of the ERP system, and it is critical in the healthcare industry. Healthcare facilities find it hard to control and manage different inventories on a day to day basis. The ERP systems are helpful in assisting keeping track of expiry dates of goods and products, locating economical supplies and coordinating the purchases and maintenance service for the equipment. The system enhances transparency and access to the organization's database enabling managers to make informed and knowledgeable decisions and report on the performance of the facility (Merode, Groothuis & Hasman 2014, p.496). Changes such as computerized and integrated business process within the organizations, sharing information and practices for work efficiency and reduce repetition and error and the ability to access organizational information in real time environment making it difficult to make quality decisions. The ERP enables management to make a decision and access the vital information available. It helps reduce the cost of administrative work.

ERP system vender selection process

The selection of a vendor is very important and crucial and the follow should be considered when selecting a vendor. For the software and vendor selection of the ERP system process, the organization has to set clear objectives of implementation of the ERP system. Then the selection team is selected, and the users are included in the team. The team is then tasked with finding the ERP system that can meet the specific requirements of the organization. The team has to identify the most important requirements and the low important requirement. The core function of the ERP has to be maintained, and they should talk to different users to get to understand their experience (Fulmer & Gerard 2014, p.78). They also have to find out the cost of the system and if an update is needed after how long. Another important factor in vendor selection is the integration of the software into the system; can it function with a third party network? It is important as the system might not integrate with the existing network in the institution leading to additional cost. The team can request a demo to ensure that it properly works with the existing system and is it user-friendly. The team can compare the quality of different vendors over a period of at least five years to ensure they provide quality services (Onut & Efendigil 2010, p.370).

ERP System Disadvantages: Strict Routine

The ERP systems have some disadvantages. According to Lengnick-Hall et al. (2014, p. 316) it follows a strict routine, and it does not have other alternatives. In case of an emergency, it has to go through all the steps which might be a waste of time, especially in the health sector. The system changes how the organization operates and it takes time to be implemented completely. The employees may resist the new system before they realize the full benefits of the ERP system.

Difficulty in detecting errors in the ERP system

In an ERP system, the errors are difficult to be detected, and they might use the wrong information across the organization, and it might cause problems in the healthcare setting. The errors can be carried through the ERP without being detected. It is also costly to acquire the ERP systems. Organisations who successfully implement an ERP system in the organization require adequate data storage, for example training on using the ERP system and network capability. It is not only time consuming, but also costly and small organizations find it hard to acquire and implement the ERP system. According to Woodside (2017, p.180), the ERP system has a lot of hidden costs that arise after implementation and integration of the systems. If the integration of the system does not fit well with the current system in the organization, some costs will incur.

The implementation and maintenance of the system are expensive.

The ERP system could help healthcare institution to improve their operational processes such as decision-making which is critical for both the organization and its managers. Making the informed decision from a single database is easy and not time-consuming. The managers can also easily access reports on the performance of the organization. All the organization activities are automated into a computer system which improves access and sharing information among worker of the organization and reduces repetition and errors that may occur.

Risk and treatment associated with ERP system integration

Some of the risks associated with ERP system include; the outdated and unsupported software can lead to crashes and integration problems in the system. The old software is not usually compatible with the system hence integration with the newer products may not occur. It will lead to the system crashing causing a breakdown in the system and operations of the healthcare facilities. It may lead to chaos as the healthcare service providers depend on the information to attend to their clients. Constant checkup if the software is supported and up to date is advised to avoid such situations.

Insufficient reporting capabilities are another risk factor associated with ERP system.

Use of external tools to report may lead to external reporting and causes loss of data control. The users who are not conversant with the system may tend to use other tools such as Excel to report, and this may lead to loss of data which are not keyed in the system. Hence others who might need the information cannot access it. During the implementation, thorough training should be provided to ensure that all the users can operate the system. In case of upgrades, users are taught how to use the system and familiarize themselves with any new feature. Constant training should be done. Delayed updates is another risk factor, and it may lead to software vulnerabilities. When the updates are delayed, hackers can access the system and acquire information that is not meant for the public. The delay can be prevented by ensuring constant updates take place.

In conclusion, it is important to introduce the ERP system in the healthcare sector, and enterprises should adopt the technology. The information managed by the healthcare organization involves the lives of the humans and appropriate reporting, and easy access to data is critical. The implementation of the system in the health sector should be done carried out carefully as any deviation can have a disastrous impact on the organization. The most critical and significant process in the adoption of the ERP system in a health organization is the selection of the appropriate and suitable system, the proper training of the staff, the right preparation for the project and maintenance of the project to avoid the risk factors that may lead to a dysfunctional system.


The right implementation and adoption of the ERP system increase the productivity. With the reduction of the cost of operations, the funds can be allocated to other needs such as hiring new staffs to assist in the organization. The patient information is transmitted faster and reliable. It will also minimize shortage in medical supplies or equipment as the supplies departments are able to determine when they are running out of stock of the medical supplies or equipment and places orders without delay.

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