All healthcare companies, from small clinics to major multi-specialty hospitals, work with complex billing and payment workflows. Many regulations, a continual influx of patients, and manual processes add to the complexity.
Even though accounting systems and ERPs help alleviate some of this burden, they can only automate some manual and time-consuming activities. Thus, the role of healthcare AP automation has been gaining importance, especially in the post-pandemic era.
Accounts Payable Processes in Healthcare Companies
The accounts payable department in a healthcare organization manages all incoming invoices and is responsible for ensuring timely processing and payments of supplier bills. They would also work with the FP&A teams and assist in preparing cash forecasts and month-end financial statements.
The traditional processes of managing invoices, tracking approvals, and making timely payments are inefficient and prone to errors. Invoices are received from vendors by email or physical mail. These invoices need to be matched against purchase orders and receiving notes. They would also need to be approved by a relevant stakeholder, after which the invoice would be manually entered into the accounting system. Closer to the due date, payments would be made to the suppliers via checks, wire, or ACH payments, and the payment transaction would also be manually recorded into the accounting system.
With multiple entities and large volumes of vendors and invoices, these processes are incredibly costly for the business.
Most Significant Accounting Pain Points in Healthcare
Since healthcare companies deal with the safety and well-being of patients, they are a heavily regulated industry to maintain and improve the quality of patient care. Regulations that apply to healthcare include but are not limited to HIPAA (The Health Insurance Portability and Accountability Act), ACA (The Affordable Care Act), and CHIP (The Children’s Health Insurance Program). These programs govern how businesses maintain their records, deliver patient care, and more. Companies that have not yet automated their backend processes struggle with maintaining regulatory compliance.
Consolidation of Businesses
Increasing compliance, staff shortages, and a general industry trend favoring hospital networks instead of smaller clinics and standalone hospitals have led to many mergers and acquisitions. While more extensive networks have outsourced mainly their back office finance operations, small healthcare businesses need help from AP automation software to streamline existing processes and invest capital in more strategic areas.
Relieve Healthcare Pain Points with AP Automation Software
Accounts payable automation solutions can help healthcare businesses run operations more smoothly and efficiently. A few of the most important benefits of automation enjoyed by healthcare companies include:
Automated AP processes enable healthcare companies to comply with regulatory requirements more efficiently. Cloud-based AP solutions record all expenses, purchases, and supplier payments safely and securely. In addition, comprehensive audit trails that track every action on invoices and payments help simplify audits and compliance.
Minimal Supply Chain Disruptions
Inefficient and manual AP processes often negatively impact supplier relationships due to the inability to make timely payments. With AI-powered AP automation software, healthcare companies can process invoices much faster, facilitate approvals from stakeholders without delays, and make timely payments. This keeps suppliers happy, prevents late payment fees or delayed shipments, and may even allow them to enjoy the benefits of early-payment discounts.
Higher Quality of Patient Care
With medical staff in short supply in the US, healthcare AP automation solutions enable the team to spend less time on accounts payable duties like approving invoices or signing checks. This ensures their bandwidth is spent providing a higher quality of patient care.
Healthcare AP automation reduces the possibility of human errors in data entry or expense allocation, leading to greater accuracy. This saves the time and effort of the accounting team and also improves the overall health of the organization by preventing them from any costly mistakes.
Lower Processing Costs
By enabling healthcare businesses to move away from paper-based and manual processes that are slow, costly, and error-prone, accounts payable solutions contribute significantly to the bottom line.
In healthcare businesses, any time saved by AP Automation software can be directed toward saving an individual’s life. Thus, by automating routine and manual activities like data entry, approval routing, and payments, AP software provides healthcare businesses the flexibility, security, and efficiency they need.
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