Offering rebates and reimbursements may make a vendor an attractive partner for major health systems. However, if you aren’t monitoring these benefits, you could be leaving money on the table.

For example, early-pay reimbursements are offered by vendors as a way to receive payments quicker while providing cost savings to their customers. A recent TAG client made the mistake of deducting the wrong amount from their early-pay invoice, which in turn cost more than $45,000.

What Can Cause a Hospital to Lose Reimbursements?

We’ve said it before, and we’ll say it again—proper vendor and contract management is crucial to a hospital or health system’s bottom line. In the case of our recent client, the root cause came down to their ERP system.

This healthcare system met the terms of their vendor’s contract to receive a .25% discount on invoice paid within 15 days. This discount was automatically applied to eligible invoices. However, after an ERP system update, the system began rounding the discount down to .20%.

While the invoices continued to be paid early, the incorrect amounts were deducted. Neither the vendor nor the healthcare system’s Accounts Payable department noticed the error.

This was uncovered during our Discovery Review process, and TAG worked with the vendor to resolve the issue.

TAG Tips for Monitoring Rebates and Reimbursements:

• Take advantage of early pay discounts when possible: Not doing so is simply giving away money.
• After ERP system updates review cash discounts to make sure information is correct.
• Review the ERP system’s cash discounts annually or semi-annually on the largest spend vendors to ensure discounts are still accurate.
• When documentation justifies a reimbursement from a vendor, leverage the organization’s size and client/vendor relationship to recover due funds.  

If it’s been a while since you’ve last checked in on how your ERP system manages reimbursements and discounts, it’s time to take a fresh look. At The Audit Group, we’ve helped hospitals and health systems nationwide recover lost funds and improve processes to grow your bottom line. Need a hand? Drop us a line to get started.