Strategic Healthcare Automation

Transcription

1 Strategic Healthcare Automation Implementing Tailored Solutions for Successful Healthcare P2P Featuring insights on... Healthcare-Focused AP and P2P Software Strategic Implementation of Healthcare-Focused Solutions Underwritten in part by

2 Contents Introduction 3 Healthcare Payables Pains 4 Strategic Solutions for Healthcare 6 A P2P Recovery Success Story 9 A Healthcare-Focused Collaboration 10 About PayStream Advisors 11 2

3 Introduction In the healthcare industry, financial professionals deal with a unique set of factors in their Purchase-to-Pay (P2P) processes and an equally unique set of challenges. Healthcare organizations have complex systems and critical, patient care-related activities that rely on speedy payment, low costs, and accurate processing. The challenges that arise often stem from numerous and frequent orders, a huge supply chain, and strict industry and government regulations, like HIPAA. The key to organizing and optimizing AP procedures can be found in Purchase-to-Pay automation. However, many healthcare organizations face huge challenges in migrating from a manual to an automated system. The expansive processes, numerous orders, and diverse suppliers all make adoption difficult, as well as driving supplier participation in these programs. For these reasons, many healthcare organizations simply automate as much as they can without disrupting their supplier base, current processes, and finances. To overcome these challenges and drive meaningful gains in automation, organizations need technology that is specialized for healthcare and can overcome the barriers to system implementation. Fortunately, there are solutions available that complement the special needs of healthcare. Software providers of these solutions use tools that work with healthcare s existing processes and are easy to install in time- and content-sensitive areas. This report outlines the way in which healthcare AP departments struggle in their procedures, and the ways in which innovative organizations have responded with strategic automation implementation. 3

4 Healthcare Payables Pains There are several AP-related problems that are typical for almost every organization, even across industries. These include paper invoice processing, manual invoice management and approval, poor supplier visibility, late payments, and the inability to capture early payment discounts. In the healthcare industry, these problems are amplified by stretched time and resources, more sensitive processes, and complex industry and government regulations. Healthcare Accounts Payable departments struggle against: Large amounts of orders: Hospitals must frequently replenish their inventory in order to keep their institution functional and provide their patients with the best possible care. This means that they push out POs and receive invoices constantly. In addition, due to the complexity of materials coding within organizations, the content in an invoice is often inconsistent with the original PO. Even if an organization has automated their PO process, many suppliers do not respond in the same format, resulting in an excessive amount of paper. Large and complex supplier bases: Because of the heavy and frequent ordering healthcare organizations must perform, they consequently have a large and diverse range of suppliers. This supply chain is complex and hard to manage, as the sheer number of the orders and suppliers grows overwhelming. Additionally, even hospitals that have moved toward an automated invoicing process typically only achieve a small level of supplier adoption in EDI networks. The remaining suppliers hesitate or refuse to participate because they do not see the benefits, or they cannot pay the network fees. Without broader adoption by suppliers, healthcare providers rarely achieve the cost reductions possible through these EDI networks.»» Manual data entry and matching difficulty: Non-PO invoices are a great difficulty for hospitals; about half of hospitals purchases do not have an extensive document trail or do not fall in the typical realm of office procurement. Healthcare organizations often receive payment requests for things like physician payments, construction and progress, patient refunds, or personnel garnishments. Due to the diverse nature of their required goods and services, many purchase requests do not take the traditional 4

5 form of POs, shipping notices, and invoices. This can create a problem in control and accuracy when it comes to matching and payment. Complex approval workflows: Invoices in healthcare AP can be diverse; they can range from low price amounts on basic products to very high prices on rare or perishable products. As a result, invoices must often be routed through a wide range of personnel for approval, including nurses who assisted with medical activities, doctors who authorized requests, and even the head of the hospital. Manual approval routing or even automated routing with an inefficient system results in late payments, frustrated suppliers, and the inability to capture early payment discounts. Slow payment and lost savings: One of the greatest ways to increase the bottom line in an organization is to pay invoices early and capture early payment discounts. Considering the amount of invoice spend that goes through a healthcare organization, early payment discounts could be a real advantage to an institution. However, inefficient payment tools, slow payment processing, and low supplier participation in automation makes discount capture very rare. In light of these issues, what are the current strategies healthcare organizations can employ to improve processes? 5

6 Strategic Solutions for Healthcare AP and P2P automation goes a long way in improving common AP errors, as it brings consistency, visibility, and control to invoice and order management. However, organizations must go beyond simply implementing a solution they must strategically reorganize their existing structures, realigning them in a way that enables better spend management and ensures long-term adoption. The healthcare environment is one of the most difficult areas to automate due to the complexity of systems, vast supply chains, and many departments within each organization. Many of the strategies that organizations use are common throughout the industry and are already accepted by their suppliers as the status quo. To properly change things for the better, an organization must work with a solution provider that truly understands the full range and diversity of healthcare needs. These providers will do the following things: Implement Multi-Layered Invoice Receipt Automation Invoice receipt is a difficult area for hospitals to automate, as the number of orders and resulting invoices is considerable. Even organizations that have an invoice automation solution only receive about 20 percent of their invoice volume in EDI format, see Figure 1. Figure 1 There Is a Large einvoicing Adoption Opportunity Among Healthcare Organizations 20% EDI and paper (converted to electronic format) Average Type of Invoice Received Within the Healthcare Industry (PayStream Advisors Healthcare Benchmarking Research, 2015) 80% 6

7 It is common for healthcare organizations to implement front-end scanning solutions in order to battle low supplier adoption and to relieve pressure on the AP department. This tactic is the result of a lack of confidence among organizations they do not anticipate supplier participation in automation, so they implement a scanning solution to make things somewhat more efficient. While scanning solutions are effective for the unique environment of these organizations, they cannot elevate healthcare AP to full efficiency. Healthcare-centric solution providers feature a diverse mix of invoicing methods in order to promote the highest level of supplier adoption and reduce paper as much as possible. Certain companies provide aggressive supplier engagement and robust einvoicing networks, along with advanced scanning solutions. These offerings can include a combination of mailroom services, front-end scanners, extraction for PDF invoices, web form submission, PO flip, and traditional EDI capabilities. The ultimate goal is not to do away with front-end scanning strategies, but to reduce the number of paper invoices that must be scanned. Increase Vendor Participation Not only does strategic front-end automation eliminate paper, it also improves supplier participation. Healthcare organizations that have some level of automation often depend on their service provider to engage suppliers. However, many developers on the market today only target the largest suppliers in the supplier base, leaving thousands more out of engagement initiatives. In addition, they often charge the suppliers for einvoicing services, which is one the greatest barriers to supplier adoption and does not promote healthy supplier relationships. Selecting the right service provider prevents these issues. The proper way to engage suppliers in an einvoicing network is to make participation free, and to include tools in the network that yield actual value for the supplier s business processes. Healthcare organizations must know what to look for in a service provider: they should select one that targets the entire supplier base, offers a diverse set of invoice receipt options, does not charge supplier fees, and offers robust supplier network tools. Streamline Matching and Approval The right healthcare-focused provider offers advanced process automation for matching and approval workflows. They understand 7

8 the complex needs of healthcare organizations in this area and provide functionality that accommodates complex PO and non-po matching, routing, escalations, and more. By streamlining this workflow, process bottlenecks are prevented, and healthcare organizations speed up the time from receipt to payment. Speed Up Payments and Capture Savings In payments processing, many healthcare organizations have already implemented Mastercard and AMEX programs to simplify payments and capture discounts. However, these solutions do not work with all vendors, increasing the risk of missed discounts. Luckily, there are solutions that address suppliers that do not accept card payments, allowing organizations to capture discounts on every invoice. These solutions combine existing p-card technologies with supplier financing (Dynamic Discounting and Supply Chain Financing) to capture more savings, speed up payments, and increase cash flow. 8

9 A P2P Recovery Success Story Savings from healthcare AP automation and Dynamic Discounting can add up to millions of dollars. One example of a successful and strategic AP software implementation involves a leading North American cancer treatment and research hospital. This hospital sought P2P solutions that both complemented their existing processes and addressed their weakest process points, including poor supplier participation and a large amount of paper invoices. They chose a solution that offered robust supplier tools, einvoicing and other invoice receipt methods, and Dynamic Discounting functionality. The cancer treatment center saw amazing results in a short time. For example, 94 percent of their suppliers were onboarded to the supplier portal within the first six months of implementation, greatly decreasing processing times and costs. In addition, the hospital transformed their invoicing procedures, eventually processing 83 percent of their invoices electronically up to 200,000 electronic invoices a year. This success story was the result of strategic collaboration between an open-minded organization and a healthcare-focused P2P software provider. The customized implementation and advanced automation tools optimized existing procedures and turned pain points into savings. 9

10 A Healthcare-Focused Collaboration There are not many solution providers in today s market that truly understand the complex needs of optimizing healthcare AP for a stronger supply chain. However, a recent partnership between two industry leaders has opened up a promising and beneficial opportunity for healthcare organizations. Taulia, an AP and supplier financing provider, and CCP Global Consulting, a software implementation consulting company, have combined their expertise to create a comprehensive and powerful automation system for the healthcare industry. CCP Global Consulting is an expert in the back-office processes of healthcare institutions. The company brings together software solutions, professional services, and deep industry knowledge to provide a full end-to-end solution for healthcare providers. CCP partners with Taulia for the use of their AP solutions in suitable healthcare implementations. Taulia s tools include Supplier Self- Services, einvoicing, and Dynamic Discounting. Both companies have extensive knowledge of popular existing AP strategies within the healthcare industry, and together they offer AP automation and implementation expertise to help organizations modify these systems to work more efficiently. 10

11 About PayStream Advisors PayStream Advisors is a technology research and consulting firm that improves the way companies plan, evaluate, and select emerging technologies to achieve their business objectives. PayStream Advisors assists clients in sorting through the growing complexities of IT applications related to business process automation with the goal of making objective, analytical, and actionable recommendations. Wherever business process automation technology is an issue, PayStream Advisors is there to help. For more information, call (704) or visit us on the web at 11