The pandemic is forcing many industries to rethink their business-to-business (B2B) payment processes for smoother and more collaborative relationships with their suppliers. Perhaps no other industry relies more on seamless vendor relationships than healthcare, as a reliable and uninterrupted source of quality medical supplies is critical to making sure patients get the lifesaving care they need.
The healthcare industry lags in payments digitization, however, especially when it comes to medical supply procurement. Up to 85% of payments are still made by check or other paper-based methods, and many processes such as invoicing and accounts payable are still done manually by staff. These slower processes can lead to frictions in procurement, especially when supply chain interruptions force hospitals to look overseas for the supplies they need.
In the July edition of the “B2B Payments In Healthcare Tracker®,” PYMNTS explores the unique challenges of the healthcare supply procurement industry and why hospital systems are falling behind their counterparts in other sectors in digitizing their invoicing and payments processes. The Tracker also offers insights on how automating these systems can improve relationships with suppliers and boost bottom lines on both sides of the procurement equation.
Around the B2B Healthcare Payments Space
Economic growth in China is projected to slow down this year by nearly half compared to 2021, with long payment delays for some businesses being blamed for the economic downturn, according to a recent report. Prices of commodities have skyrocketed in China, led by a general downturn in the economy and fed by factors such as the pandemic, supply chain disruptions and subsequent restrictions.
Meanwhile, increases in both B2B payments and the same-day payment limit are being credited for a sizable growth in payments on the ACH Network, according to a recent report. The network raised the same-day payment limit to $1 million on March 18. That expansion contributed to a 53% increase in those transactions from a year earlier, for a total value of more than $290 billion.
For more on these stories, visit the Tracker’s News and Trends section.
Huntington Health on the Payment Challenges of Procuring Medical Supplies
The global pandemic brought an unprecedented surge of patients into hospitals around the world, as well as the supplies needed to treat them, exposing weaknesses in supply chains and the methods by which medical facilities pay for those supplies. In some cases, hospitals that normally rely on stateside vendors had to look overseas for critical items such as masks and ventilators. Hospital officials met ships on docks more than 30 miles away with cash in hand to buy supplies that were marked up more than eight times the normal price from ships arriving from far away.
In this month’s Feature Story, Steven Mohr, chief financial officer of Huntington Health in Pasadena, California, talks about how partnering with a trusted financial institution set up for cross-border payments can help reduce the frictions inherent in procuring medical supplies, especially during high-demand situations like the pandemic where flexibility and speed is critical.
PYMNTS Intelligence: How Automation Can Improve Healthcare Supply Procurement and Supplier Relationships
The pandemic highlighted the need to ensure that medical supplies can be easily procured. However, the healthcare industry has been comparatively slow to adopt automated, cloud-based payment and invoicing solutions that can increase efficiency and eliminate costly errors.
Some 70% of healthcare invoices are still paper-based, according to one report, and almost 85% of purchases are paid for with paper checks. Not surprisingly, these outdated processes lead to errors that cost the industry up to $6 billion in payment mistakes. Automation of payment and invoicing processes can lead to many benefits for both healthcare organizations and their suppliers, including better speed and predictability of payments and more flexibility with cross-border procurement of medical supplies.
This month’s PYMNTS Intelligence takes a close look at the inefficiencies and challenges suppliers and medical service providers face regarding payments for bulk medical supplies and equipment. It also explores how payments automation can eliminate some friction inherent in procurement and payment for medical goods.
About the Tracker
The “B2B Payments In Healthcare Tracker®,” a PYMNTS and American Express collaboration, examines the unique challenges of the healthcare supply procurement industry and why hospital systems are falling behind their counterparts in other sectors in digitizing their invoicing and payments processes.
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