As hospitals and other healthcare professionals wrap up their EMR implementations, there is a growing interest in re-visiting revenue cycle optimizations that have otherwise been ignored for over 10 years.
Combined with a renewed interest to optimize financial workflows, technology has changed the way a process like accounts payable automation is conducted. Automations in AP, once neglected by many hospital administrators, is quickly becoming a primary goal of many hospitals. Recent advances in scanning, optical character recognition and electronic document management technologies permit increased efficiencies in workflows surrounding invoice payment.
Fortunately, because of the majority of invoices are now transmitted electronically through EDI, there is less and less paper to scan, index and manage. For many hospitals the amount of paper invoices is shrinking, but still remains anywhere from 40-70% of the total invoices received. The bottlenecks with paper invoices start at the moment they reach your mail room, and concluded with the remittance. All along that pathway there are opportunities to save time and money by reducing manual data-entry and leveraging on-time payment discounts that many vendors offer.
Account Payable automation is much more prevalent in non-healthcare industries, and the time is right for healthcare to take advantage of this now robust and mature technology.
In the face of very tangible benefits, many healthcare administrators still balk at its adoption, questioning why they would want to streamline a process that they are working hard to delay. After all, who wants to pay a bill on time when you can pay it late with few financial repercussions? Actually, this is a representation of “the way we have always done it” syndrome, and it needs to be re-examined.
But what exactly are the benefits of AP Automation?
The cost of processing an invoice can range anywhere from $1 to over $100 depending on various factors, these include the size of your organization, volumes of invoices processed and the number of line items reported on your invoices. However, one of the largest incremental costs are those associated with inefficient, labor-intensive processes like scanning, indexing and re-keying of data from paper invoices into AP applications.
These manual processes are slow and ripe for error and invoice loss. When an invoice is lost, it can take several weeks before a new one is resent. Many hospital administrators might rejoice in the prospect of delaying a large payment, but your employees are spending significant time trying to located these lost invoices and then more time spent on the phone trying to acquire a new copy. For each lost invoice you should realistically consider wasting at least one hour of time. Don’t think this is significant? Consider that Gartner research indicates that 1% of all paper documents are lost, and that on average it takes an hour to recreate these lost documents.
Now let’s consider the benefits of Optical Character Recognition, or OCR. When a business implements OCR technology to process invoices it pays off in various ways. The first is simplifying the process of linking the invoice to your AP system. With OCR the account number, invoice number, purchase order number, amount and due date can all be extracted from the document and used to link that invoice to your AP platform. This makes finding the invoice extremely quick, but it also permits the automated transfer of invoice data to your AP systems and eliminates the manual re-keying of data. OCR and auto-posting processes will save between 15 – 30 minutes per invoice. This is a significant savings in time.
Dbtech is working with customers to speed up the process so hospitals can take advantage of on-time payment discounts and avoid late fees. As the process becomes more streamlined we reduce the number of payments to incorrect vendors.
Automating the collection, indexing and access to paper invoices is a very satisfying project to undertake. Those manual processes that are eliminated are rote tasks that add little to job satisfaction. We are helping our clients to eliminate those tasks and realign responsibilities to more revenue generating activities.
So in the end, Invoice Automation is receiving new attention as a means to increase efficiencies and reduce costs. Is it in your future?