
How AP Automation Heals Financial Strain in Healthcare
by The Ottimate Editorial Team
Every healthcare organization is committed to delivering outstanding patient care. But when it comes to improving care, the focus is often on front-line operations like staffing, facilities, and clinical services. In the meantime, critical back-office functions like accounts payable (AP) are often overlooked.
That’s a big problem.
Outdated, manual AP processes cause serious financial strain to healthcare organizations. What appears to be a back-office inefficiency has far-reaching consequences. These tedious, labor-intensive processes impact financial performance, strain vendor relationships, and ultimately, affect the quality of patient care.
AP automation offers a powerful remedy. By modernizing AP processes, healthcare organizations can reduce administrative burden, improve cash flow, and focus on what matters most: patient care.
In a previous post, we examined how manual AP processes negatively impact both profitability and patient care. In this post, we’ll take a closer look at how AP automation in healthcare directly addresses these pains and why now is the time to make the shift.
What is AP automation in healthcare?
If you’re not exactly sure what AP automation in healthcare is, you’re not alone. Let’s lay the foundation by defining what this term means.
AP automation in healthcare refers to the use of technology to streamline and automate the processes of receiving, approving, and paying invoices. Healthcare accounts payable software is the tool used to accomplish this goal.
Traditionally, AP in healthcare relied on paper-based workflows, manual data entry, tedious approval processes, and physical checks. AP automation in healthcare streamlines and digitizes the entire invoice lifecycle, making it faster, easier, and more accurate.
AP automation often integrates with existing technologies, like enterprise resource planning (ERP) systems and accounting platforms. This increases healthcare financial efficiency, allowing teams to match invoices with POs, route them for approval electronically, and schedule payments – all with minimal manual intervention.
Core features of AP automation in healthcare that drive impact
Each healthcare organization is unique. As such, AP automation may look different from organization to organization.
However, there are several core features that are essential in healthcare accounts payable software. Let’s take a look at a few that are especially impactful.
Electronic invoice capture
Manual data entry takes up valuable time and resources. Plus, because it relies on human input, it’s prone to errors that can damage relationships and ding the bottom line.
Electronic invoice capture solves this by digitizing, coding, and organizing all vendor invoices. This reduces the risk of errors and delays, while freeing up finance teams to focus on higher-value tasks.
Automated payments
When AP is managed manually, late and missed payments are all too common. This can damage vendor relationships and disrupt the supply chain – making it harder for your organization to access the materials and services needed to support timely care.
AP automation streamlines the payment process. You can pay all vendors through their preferred method – whether ACH, virtual card, or paper check – all from one healthcare accounts payable software solution. This ensures vendors are paid on time, everytime. It may even unlock early payment discounts for your organization.
Healthcare compliance and audit trails
When audits happen, healthcare finance teams are often left scrambling to find the necessary documentation. AP automation in healthcare simplifies the process by creating a secure, centralized audit trail. All records and reports are easily accessible in one place, which means healthcare finance teams can respond to audit requests quickly, accurately, and with confidence.
Key benefits of AP automation for healthcare finance teams
Let’s face it: healthcare finance teams face a number of daily challenges. They’re under pressure to manage tight budgets, navigate complex regulatory requirements, and ensure timely payments to vendors. And often, they must achieve these goals with lean teams and resources.
AP automation for healthcare provides a practical solution to the common pains of finance teams. Let’s take a look at some of the key benefits it delivers.
Fewer errors and faster invoice approvals
Manually processing invoices takes a lot of time and is inherently error-prone. Data entry mistakes, lost documents, and approval bottlenecks can lead to duplicate payments, missed due dates, and disrupted workflows.
AP automation for healthcare streamlines the entire process, from initial invoice capture to approval routing. This significantly reduces the chances of human error and speeds up time it takes for an invoice to be processed.
Vendors get paid faster, cash flow becomes more predictable, and your finance teams have more time to focus on strategic work that moves the organization forward.
Improved healthcare compliance and reduced audit risk
Healthcare organizations must abide by strict industry regulations, and they must be audit-ready at all times. But manual AP processes make it difficult to maintain accurate records and quickly access the right documentation during audits.
AP automation in healthcare provides a secure, centralized system of record. Every invoice is digitally tracked and archived, which makes it easy for finance teams to retrieve the information they need, whenever they need it.
With AP automation in healthcare, organizations benefit from:
- A complete, searchable audit trail
- Instant access to financial records and reports, without digging through file cabinets or scattered digital records
- Greater accuracy and transparency for regulatory reporting
In short, finance teams can meet compliance requirements confidently, while avoiding the stress of last-minute scrambles.
Optimize cash flow and strengthen vendor relationships
Effective cash flow management is important for any organization. But it’s especially critical in healthcare organizations.
Payment delays are all too common for organizations that use manual AP processes. These delays can hurt vendor relationships and disrupt supply chains, which means an organization may not have the supplies and services needed to deliver timely patient care.
Healthcare invoice automation gives organizations real-time visibility into their spending and liabilities, which means they can make better financial decisions and ensure timely vendor payments. With healthcare payment automation, healthcare organizations can:
- Ensure on-time, accurate payment through a vendor’s preferred method
- Gain better visibility into cash flow and financial obligations
- Foster stronger vendor relationships
- Capitalize on early payment discounts, when they’re available
By improving financial oversight and fostering vendor trust, healthcare organizations are better able to secure the supplies and services they need to provide outstanding, timely patient care.
AP Automation in Action: Use Cases by Facility Type
The core benefits of AP automation we just explored are universal. However, the way these benefits show up can look different depending on the specific type of healthcare organization.
Let’s take a closer look at how three different types of healthcare organizations leverage vendor payments automation to address their unique pain points.
Hospitals and medical centers
Hospitals and medical centers provide a wide range of specialties, including surgery, cardiology, and cancer care. Some also offer educational and research programs.
Supporting these complex operations requires managing a large volume of invoices from vendors, including pharmaceutical companies, equipment suppliers, and medical service providers – among many others.
Manual AP slows down payments, increases error risk, and complicates compliance reporting. These inefficiencies disrupt cash flow, hurt vendor relationships, and hinder the organization’s ability to deliver quality, timely patient care.
With AP automation, hospitals and medical centers can:
- Easily match POs to invoices
- Handle a high volume of invoices across multiple departments
- Maintain an audit-ready environment
- Improve vendor relationships (and potentially capitalize on early payment discounts) through timely, accurate payments
With AP automation, finance teams at hospitals and medical centers can spend less time chasing paper and more time focused on strategic initiatives that’ll move the organization forward.
Assisted living and nursing homes
Assisted living facilities and nursing homes provide a wide range of services to residents, from healthcare and dining to housekeeping and recreation – often across multiple facilities. In order to provide these services, finance teams must stay on top of vendor payments for essential supplies like medical supplies, food services, and facility maintenance.
When AP is handled manually, this can be a big challenge.
Manual AP processes are time-consuming and challenging to manage, especially for lean finance teams working with small operating budgets. Invoices can easily get lost in the shuffle, disrupting cash flow and impacting the quality of care residents receive.
Increasingly, assisted living and nursing homes are turning to AP automation. That’s not surprising, as AP automation in healthcare can help these facilities:
- Reduce the administrative load on lean teams
- Centralize invoice processing across multiple facilities
- Make timely payments to vendors, which is key to maintaining relationships and providing excellent patient care
- Ensure staff has everything they need to properly care for residents
Primary care clinics
While primary care clinics typically have a smaller volume of invoices than hospitals, managing AP isn’t necessarily any easier.
Primary care clinics operate with smaller administrative teams, and staff juggle many responsibilities, from answering phones to billing patients. Most struggle to find the time to process invoices and payments manually, without detracting from patient interactions.
Manual AP processes can create significant challenges for primary clinics, including payment delays, supply chain hurdles, and unnecessary administrative burden. In the end, though, it’s the patients who feel the pain.
By transitioning to AP automation for healthcare, primary care clinics can:
- Quickly review and approve all vendor invoices from one place
- Eliminate manual filing systems and reduce office clutter
- Gain greater visibility into cash flow and expenses
- Free up administrative staff to focus on patient-facing tasks
Real Outcomes: How West Harbor Healthcare Transformed AP
Clearly, AP automation can have a large, positive impact on all types of healthcare organizations, including hospitals, primary care clinics, and assisted living facilities. One of the best ways to understand its value is by looking at real-world AP automation examples.
West Harbor Healthcare is a regional care organization that owns and manages eight skilled nursing facilities in California. Like any healthcare organizations, West Harbor is deeply committed to providing outstanding care to its residents. Efficient, accurate AP processes are essential to supporting this mission, ensuring the organization can get the supplies they need and secure critical government support for things like medications, equipment, and staff payroll.
But a change to West Harbor’s AP platform didn’t align with the company’s workflow, and the team found themselves spending hours uploading and coding invoices. This was a time-consuming process that significantly slowed down payments and disrupted operations.
The company recognized the need for a more efficient system, and they decided to partner with Ottimate to modernize and streamline their AP processes. One of the first benefits they noticed was a significant savings in time.
“We’re not spending a lot of time on every single invoice, having to code every single line item,” explained Mary Herrington, Accounting Manager for West Harbor Healthcare. “Before, I was probably spending 15 to 20 hours a week just trying to get things to work right. And now, I go in every morning or afternoon for about half an hour to 45 minutes.”
Since adopting AP automation for healthcare, West Harbor has experienced a number of other results, including
- More accurate financial statements for quarterly government reports
- Automated approval flows to keep things moving
- Easy access to archived invoices for quick retrieval
- More time for accounting staff to focus on strategic work, value-added work
This real-world AP automation example highlights how the right healthcare accounts payable software can not only save an organization time, but also improve financial accuracy, reduce administrative burden, and ultimately, support better care for patients and residents.
It’s time to get started with AP automation for healthcare
If your organization is still relying on manual AP processes, you’re not alone. But now’s the time to rethink your approach.
Investing in AP automation for healthcare isn’t just about improving your back-office operations. It’s about enabling your teams to deliver consistent, high-quality care to the patients and residents who rely on you most.
Curious how AP can transform your healthcare organization but not sure where to start? We’ve got your back! Stay tuned for part three of our healthcare-focused blog series, where we’ll walk you through the steps of implementing AP automation in your healthcare organization. Spoiler alert: it’s easier to get started than you think!
Ready to see Ottimate in action? Let’s set up time for a demo.