Amidst all of the current headwinds in healthcare, one that stands out is managing expenses. A whopping 90% of industry leaders surveyed for our new report, Redefining Expense Management in Healthcare, said expense management is a challenge — and 25% went so far as to call it “extremely challenging.”
Combine higher labor costs with surging inflation and you’ll see that healthcare organizations are walking a fiscal tightrope. The median operating margin for hospitals and health systems is only 0.2%. Between 2019 and 2022, the average supply cost per hospital patient went up 18.5% — a surge that’s 30% higher than the increase in general inflation. Analysts expect the financial turbulence to continue in 2024, particularly as labor costs climb even higher thanks to an exodus of nurses.
All of it means healthcare leaders have a critical task at the top of their to-do list: streamline and simplify their finances as much as possible.
That’s where stronger expense management comes in. Many organizations still rely on archaic processes, like Excel spreadsheets and receipt scanning, which creates blind spots in the big financial picture. These processes rely on manual action, which makes the end-of-month close excruciating and, worse, makes it longer and harder to spot spending issues or errors.
Some organizations are at the other end of the spectrum — they’re relying on several tech systems to keep track of their spend. When those systems don’t integrate, though, it can lead to unnecessary spending, like overbuying supplies and duplicate payments, and late payments. Further compounding these tech silos are the departmental silos that are common in large hospitals and health systems, leading to giant gaps in expense intelligence and expensive errors.
But what does the right solution look like? And how do you incorporate it into your existing systems and processes?
Those are the questions so many healthcare leaders are asking. They know their expense management needs to be improved, and they’re actively trying to find the right fix. In fact, our research shows that 78% of healthcare leaders aim to have an expense management solution in place within six months. The problem? They’re not sure how to turn this goal into a reality.
The solution is a single software platform that brings together data from several sources, integrates with the organization’s ERP, and is automated for both efficiency and budget optimization. The top-performing expense management solutions will garner a high return on investment,are flexible enough to be customized for specific workflows and permissions, while also being rock-solid enough to add layers of protection to sensitive data.
The last feature we listed — automation — is crucial for several reasons. The first is saving time. The right expense management platform stores receipts digitally and collects them in real-time, which means finance departments don’t have to worry about a flurry of them coming in at the end of the month. In addition to saving the finance department time, automated expense tracking saves employees time, too, giving everyone a chance to focus on their other responsibilities. This represents a major step forward for healthcare organizations, especially considering that 55% of the leaders we surveyed said increased productivity is a top objective.
Saving money is another top objective. An automated expense management system has checks and balances in place. One example is integrated virtual cards. With them, finance leaders and department heads can quickly limit the amount spent and where it’s spent. Another example is real-time duplication scans, which prevent teams from accidentally paying a vendor twice.
Most importantly, an expense management platform that has all these features operates in real-time, which gives healthcare leaders a comprehensive view of their financial picture anytime they need it.
A future of higher operating margins and increased productivity hinges on agile technology solutions and streamlined expense policies. Download our research report to dive deeper into healthcare leaders’ minds and discover how redefining expense management helps achieve top business goals.