Market Dynamics
Global Healthcare ERP Market Drivers
Growing Adoption of Cloud-Based ERP
Healthcare organizations are increasingly adopting cloud-based ERP solutions. This can be attributed to the decrease in the total cost of ownership for advanced cloud-based ERP solutions, agility and flexibility in infrastructure capacity, limited technical in-house expertise and resources required, low capital requirement and operating expenditure enable immediate return on investment, etc. Whereas big healthcare organizations can afford ERP solutions, small and medium healthcare organizations still struggle with its adoption due to high costs. Such organizations are shifting toward cloud-based ERP solutions due to low investment costs and fewer human resource requirements.
Furthermore, on-premises systems require high capital expenditure, costing approximately between USD 50 million and USD 150 million. Moreover, it takes years for full implementation and obtaining optimum results. ERP market players introduce multiple upgrades for their ERP systems in the meantime. Therefore, many large organizations have different versions/upgrades of ERP technology across different functions and geographies. On-premises ERP systems require a high degree of customization and configuration.
Cloud-based ERP systems do not require upfront investment and are based on recurring fees. Decreases in cost, time taken, labor and increased technology updates, higher degree of standardization, and ability to leverage advanced technologies are major drivers of cloud-based ERP systems. Therefore, healthcare organizations are shifting toward the implementation of cloud-based ERP solutions. For instance, organizations like Family Health, Adventist Health, Southern New Hampshire Health, and Presbyterian Medical Services use the Oracle ERP cloud for cost reduction and productivity improvement. Moreover, many healthcare organizations are looking for partners to implement. Cloud-based solutions for rapid outcomes include return on investment and end-user adoption. Many market players, such as Oracle, Infor, Premier, and Workday, offer innovative cloud-based ERP systems to meet growing customer demand.
Integration of Artificial Intelligence In ERP
ERP market players are integrating artificial intelligence technologies in ERP for various applications, including customized patient engagement and data insights at low costs. According to a 2019 Becker's Hospital Review article, 58% of software developers have already incorporated or are in the process of integrating AI into their ERP software. AI assists in time-consuming tasks such as record management, billing, data entry, expenses, and feedback tracking. AI-enabled ERP systems minimize manual data entry and calculations, provide data processing capabilities, and leverage data analytics for decision-making.
Furthermore, most ERPs generate reports using historical data. However, AI-based ERP software solutions can perform predictive analytics to enhance decision-making. Moreover, AI-based ERP systems can use data acquired from a module to make decisions in another module. This reduces human interference in performing repetitive calculations or frequent references. ERP systems significantly reduce manual data entry. The integration of AI in ERP systems further automates data entry. AI can be used for forecasting, warehouse management, and financial management. It can also determine inefficient processes, suggesting cost-cutting solutions, employee performance evaluation, and sales automation, such as chatbots.
Moreover, AI-enabled ERP in healthcare allows practitioners to find on-the-spot and accurate data. It relieves the stress of manually checking documents. It can also be used to automate medical coding and billing processes. AI-based ERPs include Infor Coleman, NetSuite Intelligent Cloud Suite, SAP S/4HANA Cloud, Microsoft Dynamics AI, SYSPRO, and Epicor EVA. The use of AI-enabled ERP systems with efficient data management and simple integration is anticipated to increase significantly over the next ten years as AI becomes more affordable and available.
Global Healthcare ERP Market Restraint
High Cost of ERP Systems and ERP Implementation
ERP cost ranges from USD 75 thousand to USD 10 million. The cost for small businesses can range between USD 10 thousand to USD 150 thousand, USD 150 thousand to USD 700 thousand for midsized, and 1 million to more than 10 million for larger enterprises. The ERP cost depends on the deployment method, number of users, number of applications, and customization. Market players manage and host cloud-based systems, thereby reducing setup costs compared to on-premises solutions. Typically, cloud-based models offer monthly subscription plans. On the other hand, on-premises solutions offer unlimited use for an upfront, one-time fee. However, maintenance and support expenses range from 10% to 20% of the licensing fee for on-premises deployment since the buyer hosts the system.
Furthermore, several participants in the ERP market employ a pricing model based on a per-user rate. Therefore, the cost of ERP increases as its usage increases. Implementation strategy, training/customer support, and number of locations are also essential components of ERP costs. Customization and add-ons are also pricey. Moreover, changing an already installed ERP comes at a very high cost. Generally, database management system costs are between 5% and 10%, infrastructure costs are between 10% and 20%, software costs are between 15% and 30%, and human resources costs are between 40% and 60%. However, the cost of a database management system can be eliminated in cloud deployment.
Global Healthcare ERP Market Opportunities
Rising Demand from Small and Medium Enterprises
ERP systems are being adopted by small and medium-sized businesses to lower operating costs and provide high-quality care. ERP provides remote access to data for patients and healthcare providers. It also automates tests, patient appointment data, and reports, which helps receive payments faster from insurance companies. The need to gather data from various systems is eliminated because all pertinent patient data is in one location. Moreover, ERP systems facilitate the easy management of procedures, treatment, transfers, admissions, and inpatient data.
Furthermore, ERP solutions can merge human resources, accounts, and finance on one platform. Such solutions optimize back-end processes such as payroll, accounts, and inventory management. ERP software has features such as stock alerts and auto-reordering. It enhances the overall operational efficiency of physicians, administrative staff, and support personnel and reduces operating costs. Healthcare organizations are also using ERPs in pharmacies and laboratories. Hospital pharmacies use ERPs for inventory management, point-of-sale profiles, accounts, purchases, and selling.
Moreover, the automation of laboratories using ERPs ensures better diagnosis and result accuracy. It aids in streamlining processes for lab tests, sample collection, sample approval, and result and financial management. A single platform can be used to manage and keep an eye on all of the important operations of healthcare organizations. ERPs provide accurate information about inventory and company finances. It can interpret facts and figures and integrate information from different platforms. Complete financial operations visibility is made possible by ERP solutions, which help businesses turn a profit and offer patients reasonably priced care. Therefore, many small and medium healthcare enterprises are adopting ERPs owing to growing awareness about the benefits of ERP.
Regional Analysis
Region-wise, the global healthcare ERP market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.
North America Dominates the Global Market
North America is the most significant global healthcare ERP market shareholder and is estimated to grow at a CAGR of 7.90% during the forecast period. ERP solutions support breaking down data silos across numerous business operations, automating daily processes, and streamlining information across departments, which has led to an increase in the adoption of these solutions in every industry across the region, including healthcare. The widespread use of healthcare ERP in North America can be linked to ERP software's advantages, including improved resource utilization and caring efficiency. An ERP tool is anticipated to replace a large number of systems offering individualized services and allow health systems to be centralized and have access to an integrated view of back-end business processes, including orders and purchasing, payroll, customer services, workload management and forecasting, supply chain management, and accounting. Integration of AI in ERP is further boosting market growth in the region.
Europe is expected to exhibit a CAGR of 5.80% during the forecast period. Supply chain complexities, rising operational costs, and current mandates for improved patient care have pressured healthcare organizations to seek innovative approaches to meet these new challenges. Healthcare providers must embrace cutting-edge digital technologies to enhance patient care, optimize operations, and boost profit margins. This has significantly increased the adoption of healthcare ERP solutions to accomplish organizations' aims to address back-office efficiencies, improve operational efficiency, maintain profitability in healthcare institutions, and provide affordable patient care. Moreover, the adoption of CRM has increased in recent years owing to its benefits in organizing, managing, and coordinating care in new and creative ways. CRM solutions are anticipated to improve patient engagement and relationship management for companies looking to enhance loyalty, build a more trusted alliance, and boost patient satisfaction.
Asia-Pacific is the third largest region. Governments and healthcare providers are driven to create new healthcare delivery models by several causes, including increasing healthcare spending, poor hospital service management, a growing staff shortage, and an increase in patients at different healthcare institutions. The increasing demand for state-of-the-art technological solutions among doctors and other healthcare professionals to deliver high-quality patient care and reduce operating costs is driving the adoption of ERP solutions in the region. Moreover, ERP aids in lowering costs, improving inefficiencies, and delivering better healthcare experiences for physicians, patients, and administrative staff, which is expected to increase its adoption in the region. It also supports automating workflows, leading to updated operations, smoother processes, and accurate reporting and offers complete visibility across departments and locations. Organizations across the region are utilizing ERP systems to eliminate financial data silos between back-end revenue cycle management activities, such as claims management, and front-end revenue cycle management activities, including patient access.
Segmental Analysis
The global healthcare ERP market is segmented by function and deployment.
Based on function, the global healthcare ERP market is categorized into inventory and material management, patient relationship management, supply chain and logistics management, finance and billing, and others.
The finance and billing segment dominates the global market and is expected to grow at a CAGR of 5.40% during the forecast period. Healthcare providers are significantly focused on implementing ERP systems for revenue cycle management and business intelligence. ERP software is utilized in healthcare to eliminate financial data silos that traditionally divide back-office tasks. However, providers are further integrating ERP systems to remove obstacles between front-end revenue cycle management tasks like patient access and back-end tasks like claims processing.
Profit tracking, ledger management, accounts payable, receivable, fixed asset management, risk management, reporting, multi-currency management, and tax management are just a few of the features that make ERP finance more and more popular as a process automation and simplification tool. The market is expected to grow as more people become aware of the advantages that ERP software offers, including increased productivity, complete financial transparency, informed planning and budgeting, real-time financial monitoring, reduced human error, mobility, no missed payments, integration of financial ERP modules with other business systems, like CRM, and centralization.
Based on deployment mode, the global healthcare ERP market is categorized into on-premises and cloud.
The on-premises segment owns the highest market share and is estimated to grow at a CAGR of 5.20% during the forecast period. On-premises ERP deployment includes installing solutions and services on computers available within the organization. On-premises software is generally known as "shrink-wrap software." Although the software must be installed within the organization's premises, it can be accessed remotely, providing reduced power consumption, costs, and maintenance benefits. Benefits offered by on-premises ERP solutions include complete control and privacy in the organization, minimum dependency on vendors, reduced implementation cost, and boosted adoption of this segment. Moreover, the lack of configurability and customization offered by cloud-based ERP systems further boosts the adoption of on-premises solutions in healthcare.
Key Players
Healthcare ERP Market Share of Key Players
McKesson Corporation
Oracle
SAP
Aptean
Odoo
Infor
Microsoft
Epicor Software Corporation
Sage Group PLC
QAD Inc.
Others
