Today’s leaders in healthcare finance are facing generational challenges from inflationary pressures. The rising cost of supplies, goods, and services are impacting the bottom line and making budgeting and fiscal planning both more difficult and more crucial than even a decade ago. It’s no exaggeration to say that inflation threatens the financial well-being of healthcare organizations to such a degree that combatting it has become paramount.
In such a landscape, tools for saving money and maximizing smarter spending are more than best practices—they’re essential. A recent Deloitte survey of procurement officers revealed that two of three companies are actively pursuing cost savings (a number about 25% higher than just a few years ago), meaning that supply chain cost pressures are being felt across several industries.
Procurement is the lifeblood of any healthcare organization, and for many, it’s an area of great opportunity. A thorough report by McKinsey and Company identifies technological solutions in the procure-to-pay process as one of the strongest areas for lowering costs and pursuing savings and value today.
Another survey of chief procurement officers recently found that success for upper-quartile, top-performing companies is strongly linked to strong digital capacities in procurement and spending. And while the healthcare industry has traditionally been slow to adopt technological innovation, the most effective leaders in the industry are finding that software automation in their procure-to-pay capacities is yielding the kind of spending savings that addresses inflation.
Identify and Leverage Data
Procure-to-pay automation replaces muddy information living on paper in filing cabinets with in-the-moment insights such as spend against budget and reports on the greatest areas of spend. Procurement officers and financial executives can align their efforts through benefits such as:
- Instant, detailed invoice access. Getting rid of duplicative spending, over-payment, and uncertainty in inventory means immediate cost savings. Invoice automation for accounts payable brings visibility, accountability, and savings potential to the fore.
- A detailed breakdown of spend and cash flow. With outdated paper processes, identifying trends and concerning patterns in spending and their impact on the bottom line often happens too late. Procure-to-pay automation empowers action in real time before the damage is done.
- Real-time reporting and alerts. With customized settings to reflect each organization’s fiscal priorities, alerts warn everyone involved in the procurement process when budgets have been exceeded or areas of spending are close to critical limits.
- Efficient and exact monthly and quarterly book closing. Procure-to-pay software automation keeps everyone involved in purchasing, inventory, and invoicing up to date and aligned with empowering detail.
- Viewing on- and off-system procurement spend across the organization. Access to every aspect of spend means costs that might have once been classified as “miscellaneous” become visible and integrated into organizational assessments as it happens.
Maximize and Measure Smarter Spend. For too long, procure-to-pay practices and workflows in the healthcare industry have been imprecise, inefficient, and a drain on financial health. In some corners of healthcare business culture, these losses have been more or less accepted as part of the cost of operations. P2P automation delivers a radical shift in expectations and results including:
- Delivering deliberate understanding around cost savings and cost avoidance. Cost savings initiatives drive down spending on necessary goods and services by identifying efficiencies and deals. P2P cloud-based automation also delivers a line of sight on areas where non-essential costs can be identified, isolated, and removed altogether.
- Monitoring contracts. Automated contract monitoring through procurement software solutions often delivers immediate and measurable cost savings. In the long term, keeping on track and identifying even small discrepancies can deliver major cumulative cost savings.
- Accounting for overall costs. In the healthcare sphere, there tend to be cost factors that go beyond listed prices for goods and services. Timed payments, delivery fees, and one-time expenses can throw off the books without the sort of measurable data that P2P automation delivers in real-time.
- Providing purchasing options. Healthcare procurement can tend toward locked-in, “it’s how we’ve always done it” patterns in workflows and spend. The best procure-to-pay automated solutions offer total choice in vendors and suppliers and allow for one-time purchasing even outside previously designated options.
- Maintaining good supplier and vendor relations. Error-prone manual procurement processes often lead to overpayment, discrepancies in contract compliance, and other areas for potential conflict that can degrade the important relationship between healthcare organizations and their suppliers. Clear data and reporting mean the kind of transparency and accountability that keeps these relationships solid and constructive.
Plan and Pursue Best Practices. With a wealth of actionable, measurable data across digital procure-to-pay processes and workflows, healthcare industry leaders are empowered to combat inflationary pressures on a day-to-day basis. They’re also able to implement the kind of organizational best practices that contribute to success such as:
- Promoting organizational alignment. Back-office staff and fiscal leadership traditionally have found it challenging to align day-to-day priorities with longer-term strategies. P2P automation lends the kinds of insights and reporting that enable unity of vision and practices.
- Keeping financial and operational balance. Measuring and tracking spend and contract compliance yield healthcare cost savings in inflationary times, but cost savings are a measure and not a strategy in themselves.
- Finding opportunities in the data. In some cases, data from P2P automation highlights areas where increased spend might be to an organization’s benefit, and pursuing savings in other areas can drive opportunities to pursue strategic spend.
- Prioritizing transparency. With authorized users accessing a unified procure-to-pay automation solution, every purchase is identifiable and trackable. Unauthorized spending becomes a thing of the past, and transparency and accountability become the norm.
- Valuing talent retention and satisfaction. Manual procurement processes have another hidden cost: dissatisfaction and lowered morale from inefficiency and frustration. Inflationary factors today impact the healthcare workforce as well, with labor shortages and poor employee retention impacting finances through turnover and training costs. Digital healthcare procurement solutions lead to greater employee satisfaction by removing a sense of wasted time and futility.
While there is no single cure for the pressures and challenges inflation poses for healthcare leadership, forward-thinking decision-makers see that automation solutions, especially across procure-to-pay workflows and processes, provide the kind of cost savings that leads to better-run organizations. With easy-to-use digital cloud-based software solutions available that combine human experts with technological expertise, a new way of looking at procurement is more than possible.
Looking to Reduce Your Annual Spend?
Procurement Partners helps customers reduce their annual spend by more than 10% with an easy-to-navigate procure-to-pay solution where users can place orders and process invoices for all suppliers. Procurement Partners is the leading procure-to-pay management system for post-acute, non-acute, and continuum of care providers and has helped organizations achieve 40% time savings and 95% supplier contract compliance through automating the procure-to-pay process.