Financial leaders as well as procurement professionals in the healthcare sphere know that procurement of goods and services is one of their organization’s leading expenses after workforce. And expenses are rising. The American Hospital Association points to inflationary pressures on the industry that resulted in a 20.6% rise in supply costs in the years following 2019.
Finding savings and value in procurement practices is increasingly recognized as crucial to maintaining the margins that keep healthcare organizations viable. A paper released by the National Institutes of Health declared that innovation in financial value in healthcare “frequently encompasses the strategies used for purchasing, charging, and delivering.”
For quite some time in healthcare, there has been an unspoken acceptance that procurement spend and inventory come with an unavoidable degree of inefficiency and financial bleeding. Particularly for bustling, complex healthcare enterprises, getting control of procurement from ordering to invoicing has often been viewed as a daunting, over-complicated, and unreachable objective.
Today, few healthcare organizations can afford to take avoidable financial losses or see their skilled staff bogged down in cumbersome, manual processes. Financial pressures in their markets, along with workforce shortages, mean that wise healthcare leaders are looking for technical solutions. Procure-to-pay technology is one factor that can have an immediate impact on the bottom line.
But what exactly do these leaders need to look for in solutions that point toward automation in their organizations’ workflow? From ordering and invoice processing to accounts payable, decision-makers must approach procure-to-pay automation with an understanding of how to get started, how to implement, and what to keep focused on to ensure the best outcomes.
Just as leaders in the industry put out a call for Requests for Proposals, it’s helpful to break down procure-to-pay automated solutions into a series of considerations:
Does The P2P Company Specialize in Healthcare?
Leading experts in business and technology, such as global management consulting firm McKinsey & Company, see the value of technological automation solutions for the procurement of goods and services. But while there are many players in this industry space, not all of them have strong experience and focus on the healthcare sphere. Questions to ask:
- Is this solution tailored to healthcare specifically?
- Is procure-to-pay at the center of the company’s business, or is it an add-on or afterthought?
- Does the organization have focused resources, such as support staff and partners, with real-world healthcare experience?
- Do they understand the needs of your organization, whether it’s a physician’s office, senior living, an ambulatory surgery center, critical access hospital, or management group?
Functionality and Capabilities
You’ll need to know what you can expect to gain from a procure-to-pay automated solution and what it’s capable of. Features you will likely need include:
- Ordering capacities that are streamlined and easy-to-use
- Real-time automated approvals
- Invoice automation and accounts payable integration
- General ledger coding
- Budget maintenance
Switching from manual procurement processes to an automated solution is multi-faceted. (A paper produced by IBM identifies procurement as “the most complex business function.) Major considerations in the implementation stage:
- Having a clear schedule and timeline, from the initial introduction call to final implementation.
- Detailing a plan for data: when and how it is going to be collected, who is going to be doing the collecting, and in what form that data should be delivered. Examples include facility account information and cost centers, ship-to addresses, a list of suppliers and customer account numbers, and purchase order history to build and review the database.
- A clear understanding of technological integrations and compatibility with accounting, finance, and other existing systems in your organization.
- A roadmap for training: who in your organization will have responsibility for and access privileges to the P2P system?
- A partner company that offers customized solutions that may be particular to your type of healthcare organization.
The healthcare industry today faces unique pressures (McKinsey & Company calls today’s healthcare business environment a “gathering storm”). Inflationary pressures on finance and workforce shortages impacting operations mean that leaders have to search for solutions.
A procure-to-pay solution can become a crucial element of an organization’s daily workflow and financial well-being. Crucial elements of maximizing operations with healthcare procure-to-pay include:
- Mobile and tablet apps, so that staff can execute their procurement activities with flexibility even when on the go.
- Approved vendors to promote cost savings and discounts when they’re available.
- Reporting capacity to provide detailed data insights that bring procurement and finance into alignment. For example, identifying the top 10 areas of spend and monitoring them can open previously unidentified savings opportunities.
- Ease of use so that new staff can be quickly trained in times of high turnover.
- Strong data security so that sensitive financial information is protected.
- Built-in flexible functions that enable you to order from different vendors when unforeseen circumstances arise.
Too many user experiences in automated processes leave the customer feeling abandoned, with the company they’re doing business with preoccupied with the next sale. Support is a crucial aspect of how your P2P solution will best serve you moving forward. Questions to ask:
Is the service agreement open-ended or are there fees and charges for future service needs?
- Will training be supplied for future updates or new products?
- Does the company see itself as a trusted partner with the healthcare organizations it supports, with a people-centered approach to making sure procure-to-pay solutions are implemented and maintained with a focus on freeing up time to focus more strongly on the caregiving mission?
Looking to Reduce Your Annual Spend?
Procurement Partners helps customers reduce their annual spend by more than 10% with an easy-to-navigate 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.