It’s time to modernize the healthcare payment system
Technology advances are offering suppliers and providers a cost-effective means to improve today’s highly manual and fragmented reimbursement processes.
Efficient payment processes benefit both healthcare providers and suppliers – helping to create more productive relationships among all trading partners. However, electronic payments, the most efficient reimbursement method, remain an elusive piece of the healthcare puzzle.
A recent report sponsored by GHX found the majority of large healthcare suppliers distribute 20% or more of their invoices by paper. Data shows it costs as much as $31 to manually process each invoice and process paper checks.
Not only is this continued reliance on manual processes untenable, it doesn’t support the healthcare industry’s need to strip waste and inefficiency out of the system – lowering overall costs while ensuring the ongoing delivery of outstanding patient care.
The good news is advancements in technology are offering suppliers and providers a cost-effective means to improve the efficiency of today’s highly manual and fragmented payment processes.
Granted, when it comes to payments, different objectives drive supplier and provider behavior, and that’s what can make streamlining payments in healthcare so complicated. Suppliers want to improve receivables performance; providers need to manage cash flow, gain access to available discounts and rebates, and of course, to avoid late fees.
Despite this complexity, most providers today are still relying on disjointed, manual and paper-based processes. These processes, such as cutting paper checks, are not only inefficient, but also time and labor intensive. Once you multiply outdated processes by the number of vendors with which a hospital contracts, it’s easy to see how complicated, costly and burdensome these manual payment processes have become.
On the other side of the trading partner relationship, suppliers are trying to balance, and accommodate to the best of their ability, the widely varied payment approaches of its customers. It’s common practice for suppliers to offer multiple payment options, including check, wire, credit card, and ACH. These choices, however, actually impede efficiency and drives up costs. If a supplier offers a customer six different ways to pay, it must be prepared to process payments in six different ways. Each individual payment method requires back-end data sources and business processes that increase labor and transaction costs that result in higher fees.
Let’s look at an example of how this plays out. When a supplier AR department receives a credit card payment, a staff member usually has to visit the credit card company’s website to manually pull down the information and load it in the system, not to mention incurring a transaction fee with that payment. Now imagine a credit needs to be applied. Is that applied through the same payment system or something separate? Suppliers who support multiple different payment methods often have completely different processes, which compound the complexity.
What the healthcare industry collectively needs to keep in mind is that every member of the trading partner community has the same top-line objective: improve financial and operational efficiency. We need solutions that meet the needs of both suppliers and providers, in ways that are seamless and easy to implement.
It’s time for the industry to evaluate its “old way” of thinking and leverage technology to establish a common, standards-based payment platform for both procure-to-pay and order-to-cash. This will give providers and suppliers, for the first time, a consolidated source for processing orders, invoices and payments and simplifying reconciliations. It will also give the trading partners, the ability to execute upon the most favorable terms and conditions across multiple payment options. A single order-to-cash platform also increases security and ensures more accurate, higher quality data.
With a common order-to-cash platform, providers can streamline upstream order and invoice workflows to expedite payments on schedule, which significantly reduces AP costs. Efficient processing can also allow providers to improve revenue through increased rebate capture. Suppliers can achieve cost savings through scale, and decrease costly transaction fees.
The healthcare industry can’t advance if we continue to work in silos. This is particularly evident when it comes to payment. We must open our minds, change traditional ways of thinking, and focus on using technology options to deliver industry-wide, standards-based payment platform to strip waste and inefficiency out of the system, and create improved relationships between all trading partners.
A recent report sponsored by GHX found the majority of large healthcare suppliers distribute 20% or more of their invoices by paper. Data shows it costs as much as $31 to manually process each invoice and process paper checks.
Not only is this continued reliance on manual processes untenable, it doesn’t support the healthcare industry’s need to strip waste and inefficiency out of the system – lowering overall costs while ensuring the ongoing delivery of outstanding patient care.
The good news is advancements in technology are offering suppliers and providers a cost-effective means to improve the efficiency of today’s highly manual and fragmented payment processes.
Granted, when it comes to payments, different objectives drive supplier and provider behavior, and that’s what can make streamlining payments in healthcare so complicated. Suppliers want to improve receivables performance; providers need to manage cash flow, gain access to available discounts and rebates, and of course, to avoid late fees.
Despite this complexity, most providers today are still relying on disjointed, manual and paper-based processes. These processes, such as cutting paper checks, are not only inefficient, but also time and labor intensive. Once you multiply outdated processes by the number of vendors with which a hospital contracts, it’s easy to see how complicated, costly and burdensome these manual payment processes have become. On the other side of the trading partner relationship, suppliers are trying to balance, and accommodate to the best of their ability, the widely varied payment approaches of its customers. It’s common practice for suppliers to offer multiple payment options, including check, wire, credit card, and ACH. These choices, however, actually impede efficiency and drives up costs. If a supplier offers a customer six different ways to pay, it must be prepared to process payments in six different ways. Each individual payment method requires back-end data sources and business processes that increase labor and transaction costs that result in higher fees.
Let’s look at an example of how this plays out. When a supplier AR department receives a credit card payment, a staff member usually has to visit the credit card company’s website to manually pull down the information and load it in the system, not to mention incurring a transaction fee with that payment. Now imagine a credit needs to be applied. Is that applied through the same payment system or something separate? Suppliers who support multiple different payment methods often have completely different processes, which compound the complexity.
What the healthcare industry collectively needs to keep in mind is that every member of the trading partner community has the same top-line objective: improve financial and operational efficiency. We need solutions that meet the needs of both suppliers and providers, in ways that are seamless and easy to implement.
It’s time for the industry to evaluate its “old way” of thinking and leverage technology to establish a common, standards-based payment platform for both procure-to-pay and order-to-cash. This will give providers and suppliers, for the first time, a consolidated source for processing orders, invoices and payments and simplifying reconciliations. It will also give the trading partners, the ability to execute upon the most favorable terms and conditions across multiple payment options. A single order-to-cash platform also increases security and ensures more accurate, higher quality data.
With a common order-to-cash platform, providers can streamline upstream order and invoice workflows to expedite payments on schedule, which significantly reduces AP costs. Efficient processing can also allow providers to improve revenue through increased rebate capture. Suppliers can achieve cost savings through scale, and decrease costly transaction fees.
The healthcare industry can’t advance if we continue to work in silos. This is particularly evident when it comes to payment. We must open our minds, change traditional ways of thinking, and focus on using technology options to deliver industry-wide, standards-based payment platform to strip waste and inefficiency out of the system, and create improved relationships between all trading partners.