For years, many organizations have said, “Once we implement the next version or the latest ERP system, we’ll be able to transform our cost optimization and value analysis efforts.” In reality, ERP platforms — along with clinical systems like Epic and Cerner — are primarily transactional tools designed to track and support daily operations across the organization. While they are essential for running the business, they are not built to drive cost optimization or value analysis (VA) initiatives. However, the data within these systems can be extremely valuable when leveraged effectively for those purposes.
#1 – Health System ERP and Clinical Software Are Not Useful for Cost Optimization or Value Analysis – but Their Data Is
There are little or no useful reports that can really spell out cost optimization opportunities nor automate a VA process. Once you have come to grips with this, you can then start to build your own systems that feed off the transactional data that ERP and clinical systems can provide.
#2 – Data Categories Are Only as Strong as How They’re Maintained in Your ERP System
While you may periodically apply UNSPSC coding to keep your data organized and up to date, the real challenge is maintaining that same level of consistency over time. Without ongoing discipline, the quality of your categorization can quickly degrade, leading to issues in analysis.
That’s why organizations often partner with companies like SVAH Solutions, which provides continuous data management by regularly receiving and categorizing your data. This ensures your datasets remain accurate and reliable for value analysis and cost optimization efforts.
Even a small number of miscategorized line items — just one, two, or a handful within a large review — can undermine credibility. Department leaders and end users will quickly identify discrepancies, potentially discrediting the entire analysis.
#3 – Create/Buy/Borrow and Maintain Your Own Ongoing Data Warehouse of Supply and Clinical Data
Why do companies like SVAH and similar firms consistently get data categorization right for benchmarking and value analysis — often to the point where their numbers don’t seem to align with what you see in your own ERP system? The difference is that solution providers transform raw data into structured, usable data warehouses, then apply proven benchmarking, utilization, and value analysis methodologies.
Before advanced tools like AI can be effective, the underlying data must be accurate and properly structured. Without that foundation, the results will be inconsistent at best — and completely misleading at worst.
#4 – Analysts Pulling Poor Data Out of ERP and Clinical Systems is Just That – They Must Do Better!
Many Value Analysis and Supply Chain teams now have analysts dedicated to pulling data for initiatives and projects — which is a great step forward. However, if those analysts are simply extracting data from existing ERP systems without further refinement or validation, then true analysis isn’t really taking place.
The role of a VA or Supply Chain Analyst should go beyond basic data extraction. They should be responsible for ensuring the data is accurate, clean, and meaningful for end users.
If you take Reality #3 to heart, your analyst should also play a key role in maintaining and improving your data warehouse. It’s time to raise the bar on what we expect from these roles.
Data is Everywhere, but How Useful Is It?
All health systems have a high level of data efficiency and systems to support the transactional level of the healthcare game, but how much further can you use that data for a strategic advantage? Being able to make savings happen on an ongoing basis using value analysis, benchmarking, and utilization management methods is now the next level of cost and quality optimization. You need to have systems in place that will support this next level of data efficiency beyond just your ERP or clinical systems. Start to strategically plan what you need to put in place to make this happen. The results will pay huge dividends in the short and long term!
Below are some similar articles that you may find interesting.
What Things are Important to Track and Measure for Value Analysis?
Gaining Buy-In to Your Cost Optimization Initiatives in Hyper Enlighted Times