Your 5-Step Plan to Modernize AP in Healthcare

Let’s face it: today’s healthcare consumers have high expectations. Whether they’re visiting a hospital, primary care clinic, assisted living communities, or another type of healthcare organization, they expect timely, high-quality care – every single time. 

Unfortunately, their expectations aren’t always met. Research shows that 60% of Americans have had a recent negative healthcare experience. 

At healthcare organizations, every process – whether clinical or administrative – plays a role in the quality of patient care. Yet, many healthcare organizations still rely on outdated, manual accounts payable (AP) processes that slow down operations, create bottlenecks, and increase the risk of costly errors.

The effects of outdated AP processes extend far beyond the finance team. Accounts payable inefficiencies have far-reaching consequences, including supply chain disruptions, strained vendor relationships, and delays in receiving the necessary equipment and supplies to deliver prompt, high-quality patient care.

The good news is that modernizing your AP processes can bring a number of significant benefits, many of which we explored in a previous post. Still, making the shift can feel overwhelming. 

It doesn’t have to be.

In this post, we’ll walk you through a practical, five-step plan for getting started with AP automation. By moving away from manual AP in healthcare, your organization can streamline operations, strengthen compliance, and, most importantly, deliver better care to the patients who depend on you. 

Step 1: Evaluate your current processes to identify accounts payable inefficiencies 

If you’re using outdated AP processes, you’re certainly not alone. Many healthcare organizations still rely on manual AP workflows that are prone to errors, invoice processing delays, and unnecessary administrative burden. 

However, before moving forward with AP automation, you must first assess your current processes and identify where they fall short. 

Start by mapping out your entire invoice lifecycle, from invoice receipt and data entry to approval routing and payment execution – and everything in between. Ask for feedback from staff who are directly involved in the process. Their insights will help you identify recurring healthcare finance challenges and AP bottlenecks. 

As you evaluate each step of your existing invoice lifecycle, ask questions like:

• How common are errors or discrepancies?
• How often are payments late? 
• Are approval delays holding up payments? 
• Are late or missing payments causing friction with vendors? 
• How much time is the staff spending on each step? 

By asking the right questions, you’ll identify pain points and inefficiencies such as: 

• Duplicate entries
• Manual data entry errors
• Delayed invoice approvals
• Missing or late payments 
• Difficulty tracking payment status 

Once you’ve identified your top accounts payable inefficiencies, you can begin to define what success will look like for your organization. In other words, you can start setting clear goals for eliminating AP in healthcare, whether it’s reducing administrative overhead, improving cash flow management, or strengthening vendor relationships.  

Step 2: Select the right AP automation tool

The right AP automation tools are key to overcoming healthcare finance challenges. Once you’ve identified your AP automation goals, you can start looking for a solution that’ll help you achieve them.

When evaluating your options, look for solutions that have features including: 

• Invoice capture: This AI-powered feature digitizes, codes, and organizes all invoices, which eliminates the need for manual data entry. This reduces the likelihood of errors and frees up your team for more strategic work. 
• Custom approval workflows: Invoices often stall in the approval process. With custom approval flows, invoices are automatically routed to the correct approver, which reduces invoice processing delays and late payments. 
• Automated payments: Late payments can harm vendor relationships and disrupt supply chains. Look for an AP automation tool that streamlines the payment process and ensures all vendors are paid on time through their preferred method. 
• Integrations: Your chosen AP automation tool should seamlessly integrate with your existing technologies, including your ERP and other accounting systems. 

Healthcare finance teams face unique AP challenges and compliance requirements. Choose an AP automation solution that has the right features and expertise to address these challenges. For example, you may need to find a solution that offers features like audit trails, documentation for regulatory compliance, and workflows that support healthcare-specific approval structures. 

Ease of use and ability to grow matter, too. A user-friendly AP automation platform means faster implementation, less training, quicker time-to-value and the ability to scale. 

Once you’ve narrowed down your options, request demos to see the AP automation tools in action. Some may also offer a trial period, so be sure to ask.

Finally, be sure to seek out feedback from industry peers throughout the evaluation process. Ask for recommendations while networking at industry events. Solicit feedback from your connections on LinkedIn. And browse reviews on G2 and other review sites to learn about other companies’ experiences with different AP automation solutions. 

Step 3: Set up your AP workflows

Your new AP automation tool probably comes packed with powerful features and functionality right out of the box. But to get the most value, it needs to be tailored to the unique needs of your organization. After all, each healthcare organization has its own structure, approval processes, and systems dependencies, so proper configuration is key to success.

Take the current AP workflows you mapped out in step one, and work with your implementation team to translate those processes into the platform. You’ll need to take steps, including:

• Defining user roles and permissions: Clearly assign responsibilities within the system to maintain control and security. For example, specify who can approve invoices, initiate payments, or access sensitive vendor data. 
• Establish approval hierarchies: When organizations rely on outdated AP processes, invoice approvals are often a significant bottleneck. Set up approval hierarchies in your AP automation platform so invoices are routed to the right people at the right time. This will help you reduce delays and avoid late payments. 
• Configure accounting dimensions: Align the AP automation platform’s data structure with your internal accounting needs, such as cost centers, departments, and location-specific tracking. This ensures accurate reporting and better financial visibility. 
• Integrate with your existing technology: Connect your new AP automation tool with your ERP and other finance systems to ensure seamless data flow and reduce duplicate work. That way, your financial data will be more accurate and your team can operate more efficiently. 

Once you’ve set up your new workflows, thoroughly test them with a small group of users. Simulate every step of the invoice process, including submission, approvals, payments, and reporting. That way, you can identify and address any issues before your full implementation, which will help set the stage for a successful rollout across the organization.  

Step 4: Train your finance team

Even the most innovative AP automation tool won’t deliver results if your team doesn’t know how to use it. That’s why training is a critical step in the implementation process. 

Remember that change (even the good kind) is hard. You may encounter hesitation or resistance from team members who are used to the manual AP in healthcare.

Start by clearly communicating the reasons behind your decision to switch to AP automation. When teams understand what’s in it for them – from less manual work to more time for strategic tasks – they’re more likely to get on board. 

Next, provide targeted training to all parties involved in the AP process. Make sure training is hands-on, role-specific, and supported by resources like:

• Quick-start guides
• Video tutorials
• Q&A sessions

Your AP automation vendor may offer training tools and resources to help boost adoption. So be sure to ask. 

Finally, ensure your teams know where to ask questions and share feedback. Ongoing support and two-way communication will help ensure a smooth transition to AP automation. 

Step 5: Monitor performance and optimize for long-term success

Rolling out your new healthcare AP automation tool is a major milestone. But it’s not the finish line.

You need to regularly monitor the performance of your AP automation platform and use those insights to optimize processes. Start by tracking key metrics like:

• Invoice processing time
• Error rates
• Payment cycle times
• On-time payment percentage 

By tracking these metrics over time, you’ll see where AP automation is making an impact and where there are still significant challenges in healthcare finance. 

Additionally, solicit feedback from your finance team, as they’re the primary users of the system. Their feedback can help you determine what is working and what is not.

Use these quantitative and qualitative insights to refine workflows, adjust approval chains, or adopt additional features your AP automation tool may offer. 

With ongoing measurement and optimization, you’ll get more value from your AP automation tool. Your finance operations will run more efficiently and your organization will be in a better position to provide outstanding patient care. 

Make the shift to AP automation with Ottimate 

There’s no doubt that patient care is a top priority for your healthcare organization. While AP processes may not be the first thing that springs to mind when you think about improving care, they play a bigger role than you might expect.  

Outdated, manual AP in healthcare can lead to delayed vendor payments, supply chain disruptions, and other accounts payable inefficiencies that ultimately affect the speed and quality of patient care.

Now’s the time to make the switch to AP automation. 

By following the five-step plan outlined in this post, your healthcare organization will be well on its way to building more efficient, reliable AP processes that empower your team, support your mission, and enable you to deliver exceptional care to every patient that walks through your doors. Ready to see why healthcare organizations like West Harbor Healthcare choose Ottimate to transform their AP operations? Book a live demo to see Ottimate it action.