It can be difficult ensuring that accounts payable and supply chain processes are in sync at any major health system. But these synergies between internal teams are critical to any organization’s success.

William Stitt, Chief Operating Officer of Credibility Healthcare LLC, presents on the topic in “A Question of Ownership – Aligning Processes Between Accounts Payable and Supply Chain,” which was presented at the 2016 Association of Healthcare Resources Materials Management (AHRMM).

As Stitt points out, relationships between Accounts Payable and Supply Chain may fail due to the constant battle of responsibilities for tasks outside of normal procurement and invoice processing. Tasks may include:

• Disputing vendor invoices
• Matching data between departments (e.g. price, quantity, UOM)
• Vendor payment inquiries
• Received Not Invoiced report

At some healthcare organizations, departments do not offer shared access to their data and operate completely independently from one another. This leads to duplicated efforts, errors, and significant time wasted.

Accounts Payable and Supply Chain Processes Align for Success

During a recent review, The Audit Group found that one healthcare system managed its purchasing transfers via a shared Excel file that only one user could access at a time. As a result, these files were updated by the Purchasing and Accounts Payable departments only once per week.

Because of the disconnect between departments, approximately 64 hours per month were spent on formatting and transferring old comments and data into the new file. The Purchasing team would resort to using invoices to correct purchase orders – which did not solve the original problem.

With the help of The Audit Group, new processes were developed to align Accounts Payable and Supply Chain management. Using SharePoint, which allows multiple users and departments to add, enter, and modify data, we streamlined the process and eliminated the old Excel document.

Now, the health system has the ability to build a historical database to track performance. Accounts Payable and Purchasing are able to make daily updates to the SharePoint. This dynamic tool allows for new lines to be added each week, and they stay open until closed by Accounts Payable. Email notifications keep all teams up-to-date on the process, and no invoices are sent to buyers without the approval of the Procurement Manager.

TAG’s Process Improvement Tips

• Create opportunities for collaboration between departments by establishing work groups that oversee joint processes.
• Schedule regular, formal Accounts Payable and Supply Chain meetings.
• Shared metrics are the key. Suggested metrics include:
  • Targets for invoices past their due date
  • Cost message reconciliation targets
  • Invoice error rates by line
  • EDI invoice success rates

It’s time to take a look at your healthcare organization’s processes. The Audit Group specializes in process improvement for major health systems nationwide. Contact Scott Gillette using the link below to learn how we can help, or continue reading for more TAG Process Engineering Tips.