By Vijay Ramnathan

There is a lot of focus on finance in healthcare these days. And for good reason. According to a recent report from the American Hospital Association, more than one third of hospitals in the US maintained negative operating margins in 2021. In total, providers lost $54 billion. Let that settle for a bit.

To help stem these losses, and prior year’s, hospitals and other healthcare providers have been investing in revenue cycle management with the goal of making it easier for patients to pay their increasing share of healthcare expenses in a timely fashion. Appropriately, the emphasis has been on digital; offering more convenient digital payment methods not only helps the patients, it also streamlines the reconciliation process on the backend and reduces operating costs and the burden on finance staff. All these things benefit the bottom line.

Another other area of healthcare finance that gets less attention is accounts payable (AP). Like any function in a healthcare organization, there are costs with paying suppliers (beyond the payments being made.) For example, what is the process for approving an invoice and what does it cost from a time and resource perspective? How many invoices does the AP department process in an average month? What percentage of payments are still made by check and what does it cost to print, sign, stuff, seal, and mail those payments?

Here are some staggering statistics:
● According to Ardent Partners, the average cost in 2020 to process a single invoice – including labor, overhead and technology – was $10.89. A lot of that cost represents staff labor—time that could be better used on spend analysis, forecasting, or supply chain financing.
● Only 30% of companies use automation to assist with accounts payable invoice processing.
● On average, 50% of early payment discounts from suppliers are missed by healthcare organizations due to their struggles to execute payments in a timely manner.

Automating the AP function can address these problems by providing visibility to each and every invoice, streamlining inputs and approvals, and getting suppliers paid on time with their preferred payment method. This enables healthcare organizations to reduce unnecessary costs, take advantage of supplier discounts, and avoid late penalties. Here’s how.

Accelerated 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.

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