A growing number of healthcare providers are using the OnDemand AP(SM) solution by GHX to automate and streamline their accounts payable processes, reducing invoice processing costs and cycle time, and improving internal controls and cash flow management. With OnDemand AP, hospitals can receive 100 percent of their invoices electronically, even from suppliers who do not currently support electronic invoicing. By eliminating the need for manual data entry and accelerating invoice approval, hospitals can reduce invoicing processing costs by more than 80 percent.
UPMC, an integrated global health enterprise headquartered in Pittsburgh, Penn., and one of the leading nonprofit health systems in the United States, is among the first healthcare providers to use OnDemand AP. With the solution, UPMC now electronically receives all of its purchase order-based invoices, which can exceed 2,000 in a single day, from more than 10,000 vendors.
Before using OnDemand AP, UPMC was receiving approximately 60 percent of its invoices electronically. While UPMC is one of the most automated healthcare systems in the country, the healthcare system estimates it would have taken years to convert the remaining 40 percent.
"Like most IDNs, our vendor pool is huge, and we still had hundreds of suppliers who submitted paper invoices," said Michael DeLuca, director of supply chain systems and consulting services for UPMC. "Our strategy in these difficult economic times is to focus on strategic sourcing activities that drive value and savings to the organization. To do that, we are automating processes, including invoicing, as much as possible. We saw OnDemand AP as an opportunity to move from 60 to 100 percent electronic invoicing in a relatively short amount of time."
With increased productivity, UPMC has been able to shift resources to more strategic-based supply chain activities.
OnDemand AP is a turnkey, software-as-a-service (SaaS) solution that addresses one of the biggest challenges in the healthcare supply chain today--a heavy reliance on labor-intensive paper invoices. Hospitals report that they can reduce costs associated with processing an invoice from an average of $14.78 to $2.51 by converting invoices from manual to electronic.(1) With enhanced functionality from OnDemand AP, GHX estimates the costs can be further reduced.
A recent study conducted by Paystream Advisors, which provides independent research and automation assessments for financial automation technology, found that more than 70 percent of hospitals still receive more than 80 percent of their invoices in paper form.
Electronic invoices help reduce error rates by eliminating the need for manual data entry and can cut invoice processing time in half for AP staff, approvers and end users, the Paystream Advisors study found. In addition, the study showed that invoice automation accelerates invoice approval, which can reduce late-payment penalties and help hospitals capture a higher percentage of early-payment discounts.
By leveraging GHX tools to improve data quality and proactively address purchase order discrepancies during the transaction process, hospitals using OnDemand AP can also reduce costly invoice exceptions.
"OnDemand AP allows hospitals to benefit from full invoice automation without a significant investment in technology," said Rammi Gill, general manager for GHX Finance Solutions. "Our SaaS delivery model provides hospitals with access to the latest technologies and typically can be operational within weeks."
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