Key takeaways: Healthcare providers and suppliers may have untapped working capital locked away in their…
In today’s healthcare landscape, provider organizations have transitioned away from traditional file cabinets and into the digital realm. This includes everything from electronic health records (EHR) to digital interactions with insurance companies (payers) and more. Yet many health systems are still managing their supply chain and accounts payable (AP) processes through paper records and cumbersome manual processes. The same is true for healthcare suppliers who experience inefficiencies in accounts receivable (AR) and slow payments that can drastically impact their business.
Think that this doesn’t apply to you and your health system, or even the suppliers you engage with for products and services? Over 70 percent of healthcare invoices are paper-based and up to 85 percent are still paid by paper check, and a high percentage of clinical care areas still process paper or fax orders.1 If you are a provider or supplier struggling with the high cost of accounting processes, test our four assumptions and data by exploring your readiness for a paperless supply chain world.
Why Go Paperless?
We live in an increasingly digital world. Many of us already do our personal purchasing and financial transactions online or via apps. Yet processes in the workplace are lagging behind, even for industries that have embraced digital solutions in other aspects of their business.
In healthcare, it’s often been a matter of competing priorities. Digitizing patient health records and acclimating to various payer platforms to ensure prompt payment for medical services have been more pressing goals. Now that many health systems have adjusted to these digital-first processes, it’s time to explore other areas where digitization makes sense.
Procurement and payment are re areas that need immediate attention. Going paperless can directly impact a health system’s bottom line as well as accelerate order-to-cash (O2C) by an average of 10.5 days for suppliers.2
Here are five key reasons health leaders and Electronic Data Interchange (EDI) leaders should be proactive in automating healthcare accounting processes.
1. Paper Records Increase the Risk for Human Error
Manual, paper-driven processes rely on staff to document processes and rectify errors that happen during ordering, payment and receiving. Unfortunately, people make mistakes, and sometimes these errors go unnoticed. Each error pulls the invoice out of the standard process and can add an average of 64 days to the payment process.3 Organizations that are still operating with paper records run the risk of introducing human error at every point in ordering, invoicing and processing payments. Each potential error can add days to the procurement timeline. This can jeopardize inventory and become costly. For example, when a healthcare provider organization recently converted to digital accounts payable processes, they had visibility into $7 million of overpayment.
“When we realized that we were overcharged $7 million due to invoicing errors opens in a new tab that were completely avoidable, there was no question we had to make a major change to the way we process invoices and payments. Between the visibility that we unlocked combined with the collaboration that Premier is bringing to the market with the launch of Remitra, we are optimistic that the industry is on the precipice of tackling the systemic issue.”9
George Godfrey Senior Vice President, Supply Chain, Baptist Health South Florida
2. Manual Processes are Cumbersome and Inefficient
Working with paper forms and files is cumbersome for procurement and accounting staff, increasing the time that goes into each transaction. On average it takes 14.3 days to process a paper invoice.5 Automated accounting is faster and far more accurate. Digital processes also offer more precise and reliable tracking for orders and payments. With automated systems, both health systems and their suppliers have more flexibility in how they allocate human resources.
3. Slow Payments Increase Frustration
Paper records slow down payments to suppliers — by as many as 120 to 180 days.6 This can be frustrating and unpredictable for both the health system and the supplier. Errors due to paper records can interfere with the prompt delivery of supplies. This is especially difficult if your organization is working with small or local suppliers who have less flexibility in cash flow.
“Over a five-month period, we have gone from only 50 percent of invoices being digital to 90 percent. We are seeing a lot of benefits from better visibility and turnaround time.”7
Simon Dawkins Vice President, Healthcare Systems, Smith & Nephew
4. Prompt Payments Can Save Money
Many suppliers offer discounts for timely payments. Provider organizations that aren’t hitting payment deadlines on time may be missing out on money-saving discounts or rebates from their suppliers. An automated system makes it easy to pay on time, as well as identifying purchasing trends that may turn into cost-savings opportunities. Premier data shows that manual, paper-based processes may add as much as $18 billion to $22 billion in unnecessary annual expenses.8
5. Cutting Out Paper Reduces Fraud
Healthcare organizations that use paper records and manual processes are more vulnerable to fraud. Fraud can cost a provider organization in the form of hefty fees. It also can be damaging to a health system’s reputation. Reducing opportunities for fraud makes good business sense and is ethically sound.
What Is the Alternative?
It’s time to rethink supply chain management. Premier’s launch of Remitra™ is the perfect time for health leaders to evaluate what paperless supply chain AP management can do for their organizations. Premier is excited to offer this new solution to members and their suppliers that are ready to take that next step and bring these capabilities up to speed with their other digital processes.
“I really hope that with Remitra™, providers and suppliers can collaborate together and achieve this goal of ensuring purchase order and invoices are exactly what we jointly expected. So instead of fixing the discrepancies, we can spend a lot more of our time and energy helping patients and addressing the fundamental clinical and economic challenges we’re all facing in healthcare today.” 4
Simon Dawkins Vice President, Healthcare Systems, Smith & Nephew
Remitra offers digitization technologies that convert paper and PDF invoices to an electronic format to automate, streamline and simplify accounts payable processes in healthcare. Solutions include electronic invoicing and tracking, as well as digital payments. With the addition of Remitra, Premier offers members and its suppliers an expanded suite of digital payment capabilities integrated with other systems across their enterprises.
Proven Expertise in the Market
Premier has been a reseller of IDS technologies for more than three years. Premier believed so strongly in the capabilities and potential that this technology has to offer the healthcare industry, they acquired the company opens in a new tab and are now scaling it across the country. Remitra’s capabilities integrate with every major commercially available enterprise resource planning (ERP) technology on the market – including Premier’s. As a result, Premier will be able to offer these capabilities to any health system, regardless of ERP or GPO affiliation.
- AdventHealth System projects $1.2M in savings opens in a new tab with e-invoicing that will move traditional invoicing processes to automated processes that will impact the bottom line.10
- Henry Ford Health System (HFHS) is one shining example of AP automation success. They turned to Remitra to digitize its paper and PDF invoices as well as implement a Single-Use-Account (SUA) solution and with this was able to recognize more than $1.8 million in savings opens in a new tab in fewer than three years.11
End-to-End Management of Procure-to-Pay Cycles
While there are solutions on the market that can automate parts of the procurement and payment process, things can slip through the cracks with a piecemeal approach. Remitra, designed specifically for the healthcare industry, offers a cohesive end-to-end solution so there are no gaps in processing or any missed opportunities.
The platform can handle everything from contracting to ordering to prompt payments all in one place. This makes it easier to mine data for insights, trends and saving opportunities, as well as ensuring order accuracy and best-price contracts. Electronic payment can also ensure organizations don’t miss out on rebates or discounts for timely payments.
Put Your Organization on the Right Path With Remitra
Premier is excited to launch Remitra and help members and their suppliers automate their supply chain and payment processes. It’s an important next step for provider organizations that have started down the digital path operations in other areas of their operations, yet are still hanging onto old AP processes. Organizations that have localized digital AP solutions will also benefit from moving to Remitra.
Take the first step to talk with a Premier consultant about what Remitra can do to modernize accounting processes for both health systems and their suppliers. Learn by simply filling out our online form and one of our professionals will connect with you.
With Premier’s Remitra, we are re-imagining and revolutionizing procure-to-payment (P2P) and healthcare together.