The last two years in healthcare has brought on challenges our industry have never experienced with the onset and continuation of COVID-19. As we approach 2022 and begin preparing for a post-pandemic world, we take a look at the top trends in Accounts Payable (AP) throughout the healthcare industry.
The pandemic has brought on the need for remote workers throughout operations in health systems. Particularly with the rise of tech advances such as telemedicine and a move toward a consumer-centric model for healthcare, many healthcare organizations plan to keep the remote working structure in place to save on operating and real estate costs.
However, this new remote work model poses challenge to our industry’s AP departments. In order to meet the work-from-home needs and demands, AP leaders must streamline processes that used to heavily rely on manual processing such as physically opening mail, running paper checks, and ad hoc exceptions resolution.
To be successful long term, AP Leaders must take action to replace these outdated ways and adopt new technology and processes including:
As the move to a work-from-home (WFH) model becomes permanent, new communication and collaboration skills are needed as well as additional ways of developing leadership skills within an organization to ensure employees are connected, engaged, and motivated.
Due to many of the issues that the pandemic has brought upon health systems, such as layoffs, staffing shortages, and working with new vendors, AP departments need to rethink workflows. Because of these disruptions, it is now more difficult to determine the appropriate approvers, resolve exceptions with supply chain, and source correct information. These issues, coupled with the countless manual tasks AP endures, have AP staff reporting much longer workdays since the onset of the pandemic.
In order to counteract these challenges, AP must lean into automation tools to process an increased invoice volume with the same or fewer resources.
Organizations that adopt AP automation are able to streamline their overall procure to pay (P2P) processes and can marshal their resources to survive in the post-pandemic world.
As more leaders across healthcare organizations need real-time insights into their processes, payments, and invoicing data, most AP departments in the industry will need to improve their capabilities to serve these organizational needs.
Increasing AP’s digital capabilities means increased amounts of data to manage, which is both an opportunity and burden. A burden due to the fact that more tools and personnel are needed to analyze and interpret the data, but an opportunity to provide insight into a health system’s spend data – insight no other department can provide such as:
However, manually tracking the information necessary to provide that insight is far beyond the capacity of current healthcare AP departments. Adopting digitalization and tracking automation provides the flexibility today’s health systems need. Without the tools and ability to digitize this information, AP will not be able to provide this data to their leaders and their organizations will suffer. Those organizations which embrace this opportunity are the ones who will thrive in the post-pandemic era.
Increasing AP’s business intelligence and visualizations not only provides insight into the financial health of a health system, it also provides much needed information to meet performance metrics and achieve leaner processes.
AP has traditionally been focused on calculating their average days to pay vendor invoices and managing their total volume of transactions on a monthly basis. Now departments can focus on next-level metrics and key performance indicators (KPIs) such as costs of processing a single invoice, days payable outstanding, and discounts captured.
With proper KPIs in place, AP can leverage data visualization tools, integrate real-time ERP information, and provide the flexibility to develop ad hoc reporting as it becomes necessary within the greater context of departmental and organizational goals.
It is important to note that AP is not responsible for all aspects of vendor management. However, it is essential they work with their procurement counterparts to build and manage a strategy. A successful strategy will lessen IRS fines, streamline data management, and decrease duplicate and other incorrect payments. Strategic vendor management is essential while health systems are tasked with doing more with fewer resources and staff.
AP serves as the primary, day-to-day contact point between the health system and its vendors. Due to this, their vendor relationships must process timely payments while also protecting the organization against errant disbursements.
Furthermore, AP must fight the fires of exceptions management, invoices received without POs, and collecting all associated account information for each transaction. AP must do the part to ensure health systems do not fall victim to a vendor-centric approach to managing their vendors, leaving the control in the hands of vendors.
To better manage vendors, AP should take a more proactive and strategic organizational role within this process that leverages all the resources of their own organizations to take control back from their vendors. This means applying all the above trends throughout the P2P process to increase interdepartmental communication, define processes, capture data accurately, and provide guidance to the rest of the organization on how to improve.
We’re here to help consult and design workflows throughout the P2P process at your health system to help tackle the challenges as we approach them in the new post pandemic world. Contact us with any questions or concerns to get your AP department on the right track.