5 reasons to streamline healthcare accounts payable

Healthcare executives face constant pressure to provide quality care to patients, streamline registration experiences and comply with data privacy regulations — all while increasing operational efficiencies and lowering costs.

The latter pressures related to costs and efficiency land heavily on healthcare accounts payable (AP) departments struggling to streamline, automate and secure their function. In fact, in a recent U.S. Bank survey, healthcare CFOs said cost-reduction initiatives were their number one priority, and 71% ranked efficiency of supplier payments as important.

Most healthcare organizations have expansive supplier networks. Making on-time payments to vendors relies on cash flow that can be impacted by factors outside the organization’s control, such as federal reimbursement, patient payments and regulatory issues. With these factors complicating the healthcare AP process, and over a quarter of organizations still making most of their payments through manual processes with paper checks, CFOs find themselves struggling to rein in the costs of making payments.

But there’s hope: Choosing the right payment and invoice processing solution can enable a healthcare organization to transform AP into a streamlined, cost-effective function, just what the doctor ordered for an expensive and difficult business environment. Here are the five biggest benefits an optimal healthcare AP automation solution can provide:

1. Reduced processing costs 

Full adoption of AP automation and electronic payments eliminates the need for extensive staff hours spent on processing, which is why Ardent Partners found best-in-class AP groups average 81% less time to process an invoice.   

Indeed, the manual handling of checks and invoices requires dedicated labor hours, data entry, routing for approval and document storage. That’s not even mentioning the reams of paper, expensive printing supplies and postage necessary in a paper-based healthcare AP model. Payables automation can wipe away many of these expenses.

2. Strengthened supplier relationships 

The right healthcare accounts payable automation solution gives a financial manager the flexibility to pay suppliers in their preferred format, whether that’s virtual card, ACH or even check. Some of these payment methods enable healthcare providers to take advantage of early-pay discounts and reduce the number of late payments, and even onboard suppliers to further save AP staff time. 

It is important to choose an electronic payment solution that can provide suppliers with rich remittance detail, which makes cash application easier for their accounts receivable (AR) departments. That builds better relationships. 

3. Enhanced visibility into cash flow 

A manual-based healthcare AP process doesn’t just encompass paper payment transactions. A manual process also includes paper tracking documents and storage files — all of which make it difficult and time-consuming to follow an audit trail or determine real-time status of a payment. 

The right solution will provide healthcare organizations with improved reporting, auditing and visibility to cash, which facilitates better decision-making across supplier relationships and spend management. This helps elevate the healthcare AP department as a strategic partner to the larger organization and frees up team members to focus on tackling big-picture supply chain, inflation and cost issues. 

4. Built-in security and fraud protection 

Processing checks leaves organizations vulnerable to payment fraud. Automating payments can help reduce the incidence of fraud by 10x, and automated invoice processing can red-flag issues before you must deal with them. 

A sophisticated AP transformation partner will have built-in security monitoring technology to identify threats and stop unauthorized transfers of funds. Your partner should also verify and maintain suppliers’ sensitive bank information and securely store the data in a location with multiple fail-safes in place. Above all, your AP partner should protect your payments from being intercepted and offer expertise to help your team avoid sophisticated fraud attempts. 

5. Rebates on AP spend 

Lastly, there may be an opportunity to earn cash back on AP spend, depending on the payment structure in place. This can increase overall positive ROI and has the potential to transform the AP department from a cost center into a profit center. 

When seeking a payables provider, it’s important for healthcare organizations to find an automated solution that offers multiple payment types and integrates into existing back-office systems and bank accounts. Having a robust rebate program is a significant bonus. 

With these features in place, transitioning to an automated healthcare accounts payable solution can help an organization increase efficiency, reduce costs and mitigate fraud risk while also monetizing AP spend. Automating AP also elevates the strategic relevance of the function and aligns it to the top priorities of healthcare organizations. 

Connect with a banking partner who understands the complexities of healthcare to see how AP Optimizer automates core accounts payable processes, leading to better outcomes for healthcare organizations. Our experts can help you unravel the challenges of today and build for what’s next.