Key takeaways: Increased labor costs and labor availability in healthcare continue to create challenges in…
If you’re a supplier for hospitals and health systems, you know it’s a rewarding yet demanding field. Increasing competition and thinning margins compounded by healthcare supply chain disruptions opens in a new tab make it a challenge to thrive in today’s marketplace. Finding ways to work smarter with your healthcare provider customers, accelerate payments and create operational efficiencies in your accounts receivable (AR) department is more important now than ever.
According to Marian Favors, Executive Director, Customer Support Operations at KARL STORZ opens in a new tab, a global manufacturer and distributor of endoscopes, medical devices and other equipment: “Customers should never feel our infrastructure, they should only feel our brand.”
Unfortunately, in the healthcare supply chain purchasing space, both providers and their suppliers do feel the infrastructure; one that’s antiquated, driven by manual processes and in dire need of a transformation.
Enter AR automation.
Are you still issuing paper invoices? How about relying on paper checks for payment? You may want to rethink those old-school AR processes after considering this PINC AI™ opens in a new tab data (as of February 2021):
- Paper invoices take 14.3 days on average to process in comparison to 3.7 days for automated e-invoices.
- Between $4-6 billion in erroneous payments is tied to invoicing errors for current contracts with accurate price activations.
- An invoice that has an error often leads to an average delay of 64 days in closing the order and getting the supplier paid.
- Paper checks are used 85 percent of the time for payment, with an average processing cost of $7.00 per check.
- Manual invoicing and payment processes can delay payment to suppliers by 120-180 days.
Technology can solve these costly AR problems created by outdated, manual, paper-based purchasing and payment processes. With Remitra®, Premier is bringing the tech to healthcare suppliers and providers – and changing the trajectory of healthcare purchasing for the better.
Built for healthcare, Remitra is one of the most comprehensive, integrated, cloud-based procure-to-pay (P2P) technology platforms that seamlessly automates financial processes to reduce waste and save time for both providers and suppliers.
Using Optical Character Recognition (OCR) technology, Remitra can take documents in any format (paper, fax, PDF) and translate them into electronic data interchange (EDI) messaging standards, which typically is the method large health systems prefer their suppliers to use. The platform effortlessly handles invoices (810s), purchase orders (850s), purchase order acknowledgements (855s), product and pricing information (832s), and price authorization acknowledgements (845s).
All EDI and non-EDI transmissions are unified for delivery between the provider’s enterprise resource planning (ERP) system and the supplier’s integrated systems, regardless of group purchasing organization (GPO) affiliation or choice of ERP.
By eliminating human intervention and taking paper out of the equation, Remitra standardizes the purchasing and invoicing process, cuts down on the potential for fraud and errors, and creates operational efficiencies on both sides of the healthcare supply chain – all of which help to ensure faster, more accurate payments to suppliers.
Here are five ways your organization can benefit from the power of Remitra’s AR automation:
- Improve the order-to-cash (O2C) process. O2C is the entire order processing system, from the moment a provider places an order all the way through to payment collection by the supplier. According to PINC AI data, Remitra’s efficient, automated workflow improves the O2C process by 11 days on average overall (helping achieve faster speed to payment).
- Increase the predictability of cash flow. An automated workflow can help to reduce your organization’s days sales outstanding (DSO), which is the time it takes to convert invoices to cash. The lower the DSO, the faster you can unlock cash flows, which will increase your margins and credit rating and support your organization’s stock value.
- Optimize visibility into your receivables. Not knowing the status of invoices and payments leads to unpredictable cash flow. Remitra offers a self-service supplier portal with 24/7 availability to track invoices and payments on demand as well as extract payment details for on-the-spot AR reconciliation.
- Reduce match exceptions. Match exceptions occur when there’s a price discrepancy between a supplier’s invoice and the provider’s purchase order, resulting in unpaid invoices and delayed payments as the exceptions are disputed. PINC AI data suggests that 5-15 percent of invoices contain match exception errors. Remitra ensures earlier notification of discrepancies and fewer required invoicing reconciliations, reducing match exceptions to as low as 1 percent.
- Secure your data. Healthcare data breaches opens in a new tab are costly. Premier is extending its technology security processes to cover all data in the Remitra platform. The same encryption disciplines we use to safeguard one of the nation’s largest clinical and workforce benchmarking databases, containing millions of patient and employee records, as well as credit card data via our stockd® e-commerce platform, apply to data in the Remitra platform.
What’s more, Remitra’s AR automation capabilities translate into hard dollars saved for suppliers.
- 500K Invoice Qty. / 5-day DSO Savings of $1,840,118
- 250K Invoice Qty. / 5-day DSO Savings of $512,280
- 100K Invoice Qty. / 5-Day DSO Savings of $187,672
- 25K Invoice Qty. / 5-Day DSO Savings of $43,114
- 5K Invoice Qty. / 5-Day DSO Savings of $8,816
Projected savings calculated using 2020 internal Premier supply chain data and invoices.
“When it comes to transacting and doing business, healthcare is so far behind other industries, it’s incredible. We need to get to the place where retail is today,” says Marian. “What’s going to get us there is an automated platform like Remitra. When providers and suppliers can conduct business on a common platform designed to solve the billions of price discrepancies that bottleneck the healthcare supply chain every year, we will have revolutionized the way we work together. I’ve been saying that for years. We need a transformation. What gets me excited about Remitra is that it’s a transformational initiative.”
Ready to modernize your accounting processes? Start by evaluating your potential AR savings with our ROI calculator opens in a new tab.
Want to dig deeper into the benefits of automation? Register to join our HFMA webinar on Feb. 17, 3 p.m. ET / 2 p.m. CT.
Ready to take the next step? Request a demo today.