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

Health Management Technology, June, 2004 by David Dyer

With enhanced reporting capabilities, we can see how and where we spend dollars to better manage and optimize our limited resources. The integrated system also gives us a better picture of our "books of business," or actual purchase volumes on particular products. This enabled us to consolidate our vendor master and identify opportunities to renegotiate contracts for better pricing. As a result, we reduced our annual increase in supply costs from 17 percent to 10 percent.

This ability to push information enabled managers to be more effective and achieve tangible benefits in other areas as well. For example, after implementing the HR/Payroll application, we began tracking labor distribution. These reports helped us to do more with existing staff, rather than having to hire additional full-time employees. Other key benefits include reducing agency nursing costs by $1 million and improving operating margins by shortening the average length of stay from 5 days to 4.7 days.

Timely access to comparative data helped Somerset Medical to overcome many of the financial challenges inherent in a healthcare setting and to achieve revenue growth of $50 million within a three-year period. Our fully integrated system provides an enterprisewide means to view, analyze and act upon financial data. This equips our management team with the information that they need to make strategic cost-management decisions and, most importantly, to maintain the financial health of our organization.

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David Dyer is vice president and chief information officer of Somerset Medical Center in Somerville, N.J. Contact him at ddyer@somersethealthcare.com.