Why provider payment automation is essential in healthcare
The pressure to continually improve patient care and services, while increasing cash flow, can be difficult to juggle as the healthcare industry grapples with reduced revenues and tight margins. Healthcare organizations will struggle to create efficient workflows, foster positive vendor relationships, and most importantly, deliver quality patient care if steps are not taken to streamline business processes.
Challenges faced in healthcare today
According to recent data from the Bureau of Labor Statistics, the Consumer Price Index rose 0.8% in February 2022 and the All Items Index rose 7.9% over the previous 12 months. The United States has not experienced such high inflation since the early 1980s. This rise is eroding purchasing power and impacting the healthcare supply chain, not only due to the rising costs, but also due to associated delays and price volatility.
The COVID-19 pandemic has also strained the country’s healthcare system and led to many overworked people choosing to quit their jobs due to stress. In a 2021 McKinsey survey of 400 frontline workers, 32% of nurses said they might leave their jobs. This challenge is not limited to front-line workers; According to a MineralTree survey, 56% of healthcare organizations expect difficulties or delays in assigning back-office roles like accounts payable. This means that actors in the health sector must do more with less.
Labor shortages and rising staffing costs are straining hospitals and their bottom line. Additionally, these labor shortages can impact supplier relationships and the entire healthcare supply chain.
The growing importance of supplier relationships
Supplier relationships have always been critical in healthcare, but a recent report suggests their importance has grown even further as we look to the future. According to the 2021 report, provider payment volumes either stayed the same (52%) or increased (38%), with healthcare cited as one of the sectors with most of the reported increases. And while 58% of respondents across all industries said their relationships with suppliers had become more strategically important, that number was 73% in healthcare and biotechnology.
The hidden costs of manual processes and paper checks
Often due to budget constraints, the healthcare industry tends to be slower when it comes to technology adoption. Much of this industry still relies on paper checks and manual processes, which consume both time and money compared to paperless and automated processes.
In fact, healthcare’s heavy reliance on paper – in the form of mailed paper statements, paper check payments, etc. – is estimated at around 300 billion dollars per year. The average processing time for a manual paper-based transaction is 8 minutes and costs about $3 more than an electronic transaction.
However, aside from these tangible costs, manual processes can also strain important relationships with suppliers and vendors. Lack of transparency in the payment process, duplicate payments, and human error can negatively impact these relationships, which can lead to shipping delays and even affect the bottom line.
How manual processes can strain supplier relationships
Relying on manual processes not only costs healthcare organizations time and money, it also negatively impacts vital provider relationships in several ways, including:
Lack of a simplified way to enter invoices
Providers must send invoices to the healthcare companies they supply to receive payment for the service provided. These invoices can be sent by mail, e-mail or via a supplier portal, then captured or correctly entered and coded in the accounting system. When healthcare companies don’t have a streamlined way to do this, human error, late payments, and duplicate processing can confuse accounts payable processes and hinder positive supplier relationships.
Slower bill payments
Manual processes slow everything down. From capturing invoices to approvals to initiating payment, each step of the manual process is time-consuming and extremely error-prone. This situation is further aggravated if these payments are sent by check, as it takes longer to print and sign the checks, as does it to pass through the postal system. And once the paper checks arrive, they must be processed by the recipient’s bank.
Contrast this with an automated AP process, which results in faster payments because these can be disbursed faster. Salespeople don’t want to wait forever to get paid and spend the interim in the dark. AP automation allows vendors to have full transparency into the payment process as well as detailed remittance data, so vendors are always “in the know” and can more easily reconcile those payments.
Increase in human error
Manual processes also introduce human error into the equation. Errors can occur when entering invoices, especially if the information is entered manually. Additional errors, as well as processing bottlenecks, can also occur at other stages of the billing process. This includes delayed approvals, incorrect payment amounts, or in some cases, processing duplicate payments for previously entered invoices. Ultimately, vendors no longer want to spend time contacting you about errors and dealing with the resulting complications. Human error will continue to disrupt streamlined AP processes and vendor relationships if not managed with a solution that eliminates these error-prone manual processes.
When AP processes are inefficient, slow and unorganized, invoices are sometimes sent twice before a payment is made. This results in duplicate payments which present a series of problems between the healthcare organization’s AP department and the provider. Now time and money are spent trying to restore duplicate payment, identify additional errors in the payment process, and reconcile vendor relationships – all tasks that delay efficiency and PA growth.
How AP Automation Improves Healthcare Operations
Fortunately, there is good news! Healthcare organizations that want to improve their supplier relationships and streamline their accounts payable processes, while dealing with the challenges of tight budgets and labor shortages, can do so with the right solution. automating. Adopting endpoint automation technology can help these organizations stay within budget while doing more with less.
Automation not only alleviates the financial pressure these organizations often experience, but requires less labor, which helps overcome challenges associated with labor shortages, while supporting a positive relationship with suppliers.
Faster invoice approvals
The right AP automation solution can eliminate errors and bottlenecks associated with invoice approvals. Instead of relying on physically passing paper from office to office for approval, invoices can be automatically routed electronically to the right people. This means there is no messy paper to waste and the approver can approve payments from any internet-connected device from anywhere in the world. Having simple and adaptable approval processes in place is especially important for frontline workers, who may not be in front of a computer all day. Additionally, automatic reminders can prompt those who have not yet responded to avoid further delays.
Better suited to a hybrid environment
Many organizations, including healthcare, have moved to remote or hybrid work environments. This means that everyone who needs to interact with an invoice from start to finish can be spread out and not even in the office. And paper-based processes are certainly not suitable for such arrangements. Electronic processes don’t require anyone to be physically in the same place as a particular piece of paper, which makes hotspot automation much more suitable for hybrid and remote work environments.
Using AP automation, all information associated with an invoice is in one centralized location, including where the invoice is in its processing, what approvals have occurred or are still required, and how and when payment will be made. If a supplier calls to request an invoice, the AP service can offer that information instantly instead of trying to track down the paperwork. Some AP platforms also have vendor portals that allow vendors to view this information at any time, as well as update their information and add invoices if needed.
The ability to evolve
With the labor shortage, it is important for many departments to do more with less. However, when the rate of invoices increases, it becomes impossible to manage them without errors. However, thanks to automation, 64% of companies surveyed were able to process more invoices with the same staff. BrightView Health, a company providing outpatient drug treatment, has opted for automation to cope with rising bills. Previously, 65-80% of their invoices were received by mail. Data entry took five to seven minutes per invoice. Through this process, BrightView Health was able to process 3,000 invoices per year. However, when that number grew to 10,000 per year, they implemented an automation solution, reducing their entire AP process to “mere minutes”.
Improve supplier relationships with an end-to-end solution
Free your AP department from repetitive manual tasks and inefficient paper-based processes with an end-to-end AP automation solution. Not only will an automated solution help you streamline your accounts payable processes, but it can also help you take advantage of prepayment discounts, rebates, and other savings opportunities.
Plus, you won’t need to increase headcount to handle fluctuating invoice volumes. In return, your healthcare organization will support a positive relationship with providers with faster payments, fewer errors and improved transparency, while gaining access to KPIs and analytics tools to help make decisions based on the data.