The digitization of healthcare — what about the back office?

April 16, 2021
Health IT
Vijay Ramnathan
By Vijay Ramnathan

The push to digitize healthcare — in the form of telehealth, remote access, and new patient care platforms — ramped up dramatically during the Covid-19 outbreak, and likely has fundamentally changed the model for patient care for the future. Meanwhile, modernizing and digitizing payments in the back office of healthcare organizations continues to take a backseat.

This is especially prevalent in small/medium sized healthcare organizations. Take supplier payments for example. Nearly 90% of these types of healthcare entities still receive paper invoices and utilize manual invoice data entry according to a 2019 report from Level Research. Yet, most account payable (AP) departments know that asking for funding for digital solutions for paying invoices will probably not be seen as a high priority.

At the same time, these organizations struggle as a result of these manual processes. Patient payments can be slow, negatively impacting cash flow. Manual approval processes and paper checks create more work for shorthanded staff and limit the visibility into cash positions and control of spending. These smaller hospitals and medical practices also typically depend on fewer suppliers for essential supplies and materials, so making on-time payments is critical to keeping these goods flowing.

The reality is smaller healthcare organizations have a whole lot to gain by digitizing back-office functions like accounts payable. Those that do, in our experience, typically wish they had done so sooner. Here’s why:

Streamlined invoice capture and approvals
Without AP automation tools, capturing an invoice is a manual process which involves opening mail, scanning, and/or keying information into the accounting system. For providers that order large quantities of medical supplies and other goods, this can mean copying lines and lines of information from multi-page invoices. Then, on top of that, invoices are often collated and emailed to department heads for approval—a process that is even more challenging for healthcare organizations with multiple locations or entities. For one oncology practice that receives 1,000 invoices a month, this manual process previously took two AP clerks each 5-6 hours every day.

Another organization, an outpatient treatment facility, found that automating the invoice receipt and payment process allowed its accounting team to increase their productivity significantly by spending less time on invoice QA checks and chasing down approvals. AP automation solutions enable healthcare providers to capture any invoice in digital form and check for duplicates in the system, saving time and manual effort and eliminating entry errors and other unnecessary headaches. They can also digitize the invoice information, helping make more accurate spending forecasts and improving their long-term financial planning via easy historical and anticipated spend reporting.

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