Forging core strength: New Jersey hospital uses fully integrated business system to improve financial management
Author: Health Management Technology

Challenging financial conditions continue to plague the healthcare industry--most notably, declining reimbursements, costly labor shortages and rising operating costs. These financial pressures collectively shrink already tight operating margins and test the viability of many healthcare organizations.

Somerset Medical Center, a nonprofit community teaching hospital based in Somerville, N.J., had legacy systems with outdated processes that limited access to the timely, detailed data which managers and executives need to make critical cost-management decisions. To improve financial management and streamline complex, manual tasks, we needed a fully integrated system to enhance the efficiency of our core business processes and optimize our assets.

Islands of Information

Somerset Medical has 1,800 employees, 355 licensed beds and net revenue of $170 million. In early 2000, we met minimum Y2K compliance issues, but had not invested heavily in new technology in more than a decade.

Our hospital had a legacy materials management system with a proprietary design and database arrangement. Materials, finance and HR/payroll data were housed within three separate databases, making it difficult for users to integrate pertinent data with the general ledger. A financial analyst had the daily task of trying to reconcile information within these systems. Irreconcilable data created friction between departments and resulted in a $1 million discrepancy between the general ledger and the materials system. Another factor negatively impacting our bottom line was an annual supply cost growth of nearly 17 percent.