OnDemand AP solution helps hospitals reduce processing costs

Jun 17 2010

For many healthcare providers, 90 percent of the costs associated with invoices are tied to manual processing. By automating all invoices through the OnDemand AP® solution from GHX, hospitals can reduce processing costs by an average of $12 per invoice.

Saratoga Hospital in Saratoga Springs, N.Y., is one of the first hospitals to employ OnDemand AP. This invoice automation solution makes it possible for them to receive 100 percent of their purchase order (PO) invoices electronically, even from suppliers who still submit invoices via fax or mail. Prior to going live, Saratoga Hospital was receiving up to 40 percent of its invoices from vendors via Electronic Data Interchange (EDI), but the remaining 60 percent were paper. With OnDemand AP, Saratoga Hospital benefits from electronic processing, while also gaining visibility into exceptions, freeing up the Fiscal Services department to concentrate on more "financially important" tasks such as accruals. Saratoga's next goal is to automate non-PO invoices using OnDemand AP.

"I was experiencing a 15-20 percent invoice exception rate in my materials management information system, and our accounts payable processor was absolutely buried," said Becki LaGrange, systems analyst, Materials Management, at Saratoga Hospital. "Now that we have moved to 100 percent electronic invoices for purchase orders, my exceptions are handled in OnDemand AP before I even put them into my system."

OnDemand AP enables hospitals to eliminate manual invoice processing and reconciliation tasks, cutting the average time it takes to process an invoice from 25-60 days to 2-5 days while also reducing keying error rates. OnDemand AP also helps providers maximize labor efficiencies, reduce hard-dollar costs and better administer payments.

With OnDemand AP, suppliers send paper invoices to a lockbox for optical character resolution processing. Provider AP staff can monitor invoices received and, because manual invoice processing is eliminated, they only need to address discrepant invoices. This results in shorter invoice processing cycles and lower invoice processing costs.

"AP automation represents a significant opportunity for hospitals to further lower costs and improve efficiencies," says Rob Gillespie, CFO, GHX. "It will also be a key factor in the realization of our goal to cut another $5 billion out of the cost of the healthcare supply chain over the next five years." GHX hospitals and suppliers have already documented $1.3 billion in savings since 2006.  

Attendees at the 2010 HFMA ANI Conference can learn more about OnDemand AP by stopping by booth 691 during exhibit hours on Monday and Tuesday, June 21 and 22. Or, to learn more about AP optimization in general, download this recent white paper from GHX, which will also be provided to all HFMA ANI attendees.