In our last post, we introduced “Exception Monitor”: a workflow automation tool that enables healthcare supply chain teams to effectively manage their invoice/match exceptions. We built and launched this tool with our pilot partner in May 2022 and have continued to add features and enhancements. In this article, we share the key wins, learnings, and opportunities that we have uncovered during our ongoing pilot with a leading hospital.
One key performance indicator (KPI) we use to track the success of “Exception Monitor” is the percentage increase in our client’s exception resolution rates. We tracked their average resolution rate over the 6-week period preceding our launch and have compared it to the period since. Prior to launch, our client was resolving 340 exceptions per week. Since launch, they have been resolving 675 exceptions per every week. Given that their team is spending the same amount of time on managing exceptions, this statistic represents a doubling of their productivity.
Prior to the launch of Exception Monitor, our partner hospital’s purchasing team spent approximately 50% of their time managing exceptions. With our tool doubling productivity, these team members get back 2 hours each day. As a result, the impact from employee time savings alone is worth over $175,000 annually for a team of 8. Adding in the time savings for the additional departments now using our tool (including Contracting, Accounts Payable, Receiving, and Systems), we estimate over $500,000 in projected annual savings — just for employee time.
We have a highly-engaged user base that sees the value that this tool brings them as 80% of them log in every week. Our users influence our product roadmap by continuing to request and prioritize features that bring them the highest operational value. In total, our users spend over 82 hours in our tool every week, with each individual user spending an average of 61 minutes in the tool daily.
Overall, these key metrics directly translate to reducing supply disruptions by accelerating the resolution of exceptions, reducing the accounts payable outstanding to suppliers, avoiding credit holds — giving invaluable time back to supply chain teams to focus on higher priority initiatives.
Hospital executives and supply chain teams can use our new dashboard to visualize and monitor the KPIs they track for match exceptions across their organization. We worked with them to create metrics that track historical trends, as well as give a current snapshot of pending exceptions. They are now able to track performance metrics that they did not previously have access to, such as first contact SLAs and queue time. This gives them insight into process bottlenecks, enabling them to prioritize resources effectively and track progress over time. Users can filter this dashboard by team, user, and vendor.
One of the things we learned is that while some teams work on exceptions as a single entity (working on one individual exception at a time), others work on them by grouping related exceptions together by contract, vendor, and purchase order. This led us to create the bulk actions feature, which allows users to take actions on multiple exceptions with one click in our tool. Bulk actions include: changing exception status, adding a comment, re-assigning exceptions, and exporting exceptions to a CSV file. Bulk actions allow each team to work at the level of granularity they find most efficient and productive.
Another key learning is that each team focuses on different data points while working their exception queues. For example, while the pricing/contracting team directs their attention primarily toward price differences (between the purchase order, invoice, and contract), the receiving team only looks at the quantity variance (between the purchase order, invoice, and receipt). To address these differences, we created a custom column filter — allowing individual users to select the columns they want to view in their queue. This helps teams eliminate the noise and focus on the data that truly matters to them, allowing them to resolve exceptions faster.
Supply chain teams have been resolving match exceptions ever since ERP systems were first adopted. Efforts to reduce the inflow of exceptions at the source lacked one key piece of information: a historic record of root causes. You can only ever see a snapshot of exceptions at any given time. Each team member will tell you what the most common root cause is, but there is no system to record this information and view it at scale across multiple teams.
We address this problem by allowing users to identify the root cause(s) at the source, when working on an exception. Leaders can view reporting on root-causes on their dashboard — for the entire organization or broken down by team, user, or vendor. This allows leaders to focus on resolving the largest root causes at the source and work with vendors to resolve recurring issues. Not only does this feature help teams resolve exceptions faster, it also reduces the number of exceptions created in the first place.
“Exception Monitor” does a phenomenal job at helping the healthcare supply chain teams resolve their exceptions efficiently. What if we could help prevent exceptions from arising in the first place? We plan to use our AI-enabled algorithms to surface real-time alerts and identify patterns such as:
a) SKU #123 recently had a price change, and 3 associated POs have been on exception since.
b) Contract S1000 is in effect, but your item master has not been updated yet resulting in 5 exceptions so far.
c) You have not received any product from Supplier X in the past 15 days, and all of their POs are on receiving exception.
Our proactive alerts will help the teams resolve issues at the source before they snowball and even prevent exceptions for occurring in the first place.
Healthcare suppliers have expressed significant interest in using this same tool to enable data transparency and helping resolving these exceptions in real-time. We will be launching “Exception Monitor” with suppliers to allow them to view their specific client’s match exceptions and interact with them directly within our tool. This creates enormous efficiencies by removing the need for health systems to export relevant exceptions, email them to suppliers, and communicate via phone.
With this functionality, suppliers will be able to interact with providers directly within the tool, and attach documents such as credit invoices and proof of delivery that will go directly to the relevant team and user. Ultimately, this enables suppliers to be paid faster and allows hospitals to benefit from favorable payment terms — creating a true win-win relationship.
Healthcare supply chains are ripe for automation. We have proven through “Exception Monitor” that data-enabled automation has led to an astounding increase in efficiency and productivity in resolving match exceptions. However, this process is only one of the many workflows that healthcare teams perform daily.
Today, hospitals have existing processes and workflows that are highly manual and inefficient to deal with a variety of daily tasks such as: demand planning for surgical cases, managing and approving substitutes, identifying and resolving backorders, tracking recalls, analyzing contracts for upcoming renewals, and many more. While some health systems have created stop-gap solutions to help with these using homegrown tools like SharePoint and Power BI, most are still overwhelmingly relying on email and Excel.
There remains a huge opportunity for supply chain automation — to build software that not only automates all the redundant, repetitive, and data-querying tasks, but also leverages AI to analyze historical data, identify patterns, and proactively recommend actions. Clarium is continuing to build game-changing software tools like these with our pilot hospitals, and we couldn’t be more excited for what’s to come.
Join us and learn more at clariumhealth.com.
Reuben Mathew Philip is a software engineer with a stellar record of automating and optimizing processes in the healthcare, automotive, and retail e-commerce sectors. He is passionate about leveraging computer science and big data to help hospitals dramatically reduce cost, waste, and inefficiency. At Clarium, Reuben is building intelligent automation tools that enable supply chain teams to increase productivity, lower cost, and ultimately, improve the quality of patient care. When he’s not working on modernizing the healthcare supply chain, you’ll find him running along the Charles River in Boston and singing karaoke with friends.