4 Ways AP Throttles Business Growth at Medical Facilities

4 Ways AP Throttles Business Growth at Medical Facilities
4 Ways AP Throttles Business Growth at Medical Facilities

Eyal Feldman is Founder & CEO of Stampli

Is Accounts Payable the weakest link in your medical facility’s growth strategy?

At first glance, the answer to that question may seem to be a resounding “no.” The standard playbook for success in the medical facility industry focuses on factors like identifying and delivering in-demand services, establishing a strong brand and building relationships with local hospitals and physicians to create a referral network.

If you get these things right, you might assume that AP – a relatively routine process at most businesses – should play little role in shaping your ability to acquire customers and grow revenue.

In reality, though, AP often proves to be a more pivotal factor in shaping medical facility success than business leaders realize. Although it would be an exaggeration to say that AP problems are the only reason why medical facility businesses may fail to grow, the AP function should be among the first places that CFOs look when trying to determine why growth projections don’t match reality.

Here is why AP processes are so critical to medical facility business success, how to tell when AP is stunting business growth and how to improve AP so that it becomes an enabler, rather than an inhibitor, of business effectiveness.

Why poor Accounts Payable practices can hinder medical facility growth

Making the AP process efficient and scalable is important in any industry. But for medical facilities in particular, AP problems can prove particularly challenging, for several reasons.

Mergers and acquisitions

Mergers and acquisitions are a common occurrence in the healthcare industry. In fact, they’re often at the crux of growth strategies for medical facilities aiming to expand their footprints and increase their brand recognition. But mergers and acquisitions can lead to major headaches for AP processes. When you join two businesses that have different payment systems and procedures in place, and different staffs for overseeing them, you’re likely to experience disruptions and struggle to keep AP efficient.

High staff turnover

The medical facility and healthcare industry suffers from infamously high turnover rates, not just among front-line workers but also administrative staff. This is a problem from the perspective of AP because learning to manage a medical facility’s General Ledger can take months. When staff who know how to work effectively with the GL leave, disruptions to payment processing can result, leading to delays in revenue realization and slower revenue growth.

Regulatory risks

The healthcare industry is subject to very strict regulations, from the privacy of patient data to the complexities of Medicare and Medicaid coding or billing requirements. This means that having extensive oversight of AP processes in place is critical for avoiding compliance violations and fines. In many facilities, this entails multiple layers of checking and validation, which slows down AP operations, making it harder for medical facilities to grow rapidly.

Resistance to new ideas

Like any business, getting buy-in for AP improvements at medical facilities can be a challenge. Healthcare professionals will tell you that they’re primarily focused on patient care, and any changes to administrative procedures can be seen as a distraction or unnecessary complication. In reality, staff are typically accustomed to using a certain AP system and processes, and getting them to change – even if the changes will make their jobs easier – is often an uphill battle. In addition, the specter of regulatory risks makes everyone that much more cautious — and that much more willing to accept the status quo as the best option.

How to know when AP is slowing business growth

How do you know when a problem with AP – as opposed to a different business issue – is among the obstacles blocking your medical facility’s growth? Indicators typically include the following:

  • Mistakes, delays and unhappy vendors: Late payments, a high rate of invoice disputes and frequent errors in financial reporting are reliable signs that AP is not as efficient as it needs to be to sustain healthy business expansion.
  • High turnover in AP roles: Frequent departures by staff who work with AP may mean that your AP system is frustrating and inefficient. They may also mean that your employees lack mastery of your AP procedures because they have little experience with them.
  • Compliance issues: Fines, penalties, or audit notes related to AP errors mean that AP is not being managed efficiently. They’re also issues that hamper your business’s ability to grow and record revenue effectively.
  • Missed market opportunities: If your business finds itself missing out on opportunities like early payment discounts or struggling to invest in new services that are in demand within your market, your AP function is not driving the operational efficiency it needs to in order to streamline business growth.

The root causes for these issues can vary; for example, high AP staff turnover could be the product of flaws in your AP processes, or it may be a symptom of broader issues, like salaries that are not competitive in your market. Either way, though, the effect from a business growth perspective is the same: Your company struggles to expand in an efficient, streamlined way due to AP shortcomings.

Fixing AP to drive business success

Flaws in AP systems and processes can be difficult to avoid at medical facilities, given the complexity of managing payments at a business that offers multiple types of services, relies on a wide range of vendors and must work with a variety of both private and government-managed insurance plans when accepting payment from customers.

The good news, however, is that AP inefficiencies are also easy enough to correct for many medical facility businesses. To improve AP, start with process reengineering. Analyze your current AP processes to determine where bottlenecks exist that slow down payment processing or require staff to spend more time managing payments than they should. From there, you can identify and implement opportunities to streamline your approach to payment processing.

Choosing the right AP tools to complement your streamlined processes is critical, too. Look for AP software that automates AP processes as fully as possible. Automation not only reduces the time and effort that staff must spend on managing payments, but also makes it easier to onboard new staff and minimize the impact of turnover on AP processes.

Outsourcing AP processes may make sense in some cases, too. If you just don’t have the resources to manage AP in-house, you can take advantage of the expertise and efficiency of outsourced providers.

In addition to the changes just described, you should also invest in standard measures – like staff training, staff retention initiatives and the establishment of a culture that prioritizes efficiency – that can streamline business processes in any context. But when it comes to AP in particular, having streamlined processes and automation tools in place lays the foundation for a healthy overall AP practice.

Too often, AP is a drag on the ability of medical facility businesses to grow. That’s why CFOs and other business leaders should be on the lookout for signs that AP is among the weakest links in their business’s growth strategy.

If it is, they should adopt measures – like AP process reengineering and the implementation of software that can automate complex AP processes – that transform AP from a bottleneck to an accelerant of business growth.

About Eyal Feldman 

Eyal Feldman is the Founder & CEO of Stampli, the only AP automation software that doesn’t require you to rework your ERP or your AP processes.


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