COVID-19 Critical Challenges Told By Healthcare P2P Staff

SpendMend Team

Written By: Amanda Geelhoed Papach, Marketing Director at SpendMend

A few weeks ago, SpendMend created a COVID-19 Idea Exchange for Healthcare Finance, Internal Audit, Supply Chain, and Accounts Payable Departments. This Idea Exchange survey requested input about how the COVID-19 pandemic has impacted their work environment and processes. We received many thoughtful responses from healthcare professionals from over 31 major U.S. hospitals. The data gathered was eye-opening, meaningful, and thought provoking.

The pandemic has affected every facet of the healthcare industry, but the answers to one key open-ended question needed to be shared. The question “What are the critical challenges you faced throughout the COVID-19 outbreak?” I have broken the answers down into categories, and hope these responses show that we are in this together and other hospitals are experiencing the same concerns you are.

 

  1. Staffing Issues

    1. Limited Staff – “We had limited staff so the first thing we did is re-prioritize tasks within the department.  Essential tasks were prioritized highest.  We then set parameters around non-essential tasks and assigned targeted dates.  While we still have a backlog on some of the non-essential tasks – we are functioning at normal level on our essential tasks.”
    2. Furloughed Staff – “Until this past week this was not an issue for us but with the additional financial impact, we are being asked to furlough 20% of our team on a temporary basis.  We have decided rather than to completely shut down for a week or fully furlough an associate we would rotate one staff member each day which provides the same overall financial result yet provides us coverage for our internal customers and vendors.”

  2. Working Remotely

    1. Working from Home – “It took a while for us to get settled in with remote access but once we did, we are functioning at probably 75% of normal.  We froze all our automation projects and our system conversion timeline has been extended due to limited resources all around the hospital.”
    2. Staff Communication – “I would have said our staff communication was average before COVID.  I think we have improved our overall staff communication using video conferencing.   Our meetings are shorter with better participation.  Each participant adds to the agenda and we go around the Zoom room and address all the points.  We document the notes while we are on the call and it’s been a great way to stay connected.”
    3. Motivating Staff – “Working remote really makes this a challenge.  We made an effort to make it personal and gave everyone a chance to comment on what they liked and what they didn’t.  We took the positive responses and incorporated some of those recommendations into our overall process and the ones we were challenged with we discussed various ways to fix the issue.  The team was very open to discuss change and I think motivated them to openly communicate.”
    4. Remote Access – “This has been extremely challenging.  First, we could not get remote access for all the users.  Then we had connectivity issues.  After about 2 weeks of difficulty we were finally able to fully connect to our systems.”  
  3. Exception Processing – “Our non-match invoices created the biggest challenge for us.  Our workflow routes the match exceptions to procurement after AP has performed initial review.  With procurement focused on PPE we started to backlog exceptions.  Procurement and AP worked together to develop new exception limits and prioritized the larger exceptions which procurement agreed to turn within 3 days. Those transactions under the new match exception limit were paid and a variance account established.  We notified our vendors that due to COVID -19 we would be processing transactions and tracking exceptions.  When we get back to full staff, we will reconcile those vendor’s variance starting with the largest supplier balance.” 
  4. Invoice Approval – “Our invoice approval is automated for the most part, but we are finding delays in obtaining approval.  Because of this we have noticed the vendor call activity increasing and duplicate invoices being presented from suppliers.”
  5. Interacting With Suppliers – “At first we found it difficult to reach our normal vendor contacts but over time this improved.  We just tried to prioritize critical tasks and limited our outreach.”
  6. Third Party Invoice – “This was a real challenge.  We outsource certain functions that are performed offshore which was totally shut down.  We had to scramble to get resources in place to cover the gap in our process. One thing is for sure, we are looking at each of our processes to ensure there is a fall back option.”
  7. Pause Projects – “COVID paused all projects we have going on.”

We don’t know how COVID-19 will change healthcare, but we do know that as a healthcare community we must work together to support each other. As critical challenges continue to change and grow – know that you are not alone in your experiences #weareinthistogether.

Webinar Recap: 5 Hidden Ways That COVID-19 is Impacting Your Business

SpendMend Team

Written By: Rob Heminger, SpendMend President, rheminger@spendmend.com

Yesterday I hosted a webinar entitled, “The five hidden reasons why COVID-19 is hurting your Procure-to-Pay (P2P) process.”

I used the presentation to reveal several hidden areas throughout the P2P cycle where U.S. hospitals are losing significant hard and soft dollars. I was motivated to deliver this webinar because of the unique visibility I gain through the work that I do on a daily basis.

The SpendMend team oversees many cost cycle recovery initiatives at nearly 100 top U.S. health systems.  We manage and review hundreds of billions of dollars in hospital spend.  By leveraging our in-depth data and analysis, we uncovered and outlined several trouble spots that seem to be hiding in plain sight.  Our goal was (and is) to create as much visibility as possible and to help P2P professionals throughout the healthcare industry to take notice of and to address these issues.

Specifically, for this webinar, I compared and contrasted trends I was seeing in client data that I had received in the last few weeks versus what I had noticed in the data from January of this year.  Basically, I just looked at data from right now versus from the period right before the COVID-19 pandemic took over our economy – and the difference was night and day. 

From the vendor data, I noticed that suppliers were being onboarded at an alarming pace.  The incidence of duplicate or related vendors being set up in the hospital system’s shot up 86% over the typical baseline. These suppliers records are 2.9 times more likely to include invalid or missing tax identification numbers.  As the “rush” to service COVID-19 related demands became a priority, vendor due-diligence and compliance decreased starkly.  And all this is occurring at a time when the strained commercial conditions of the market are giving rise to higher likelihood of fraud.  In fact, Google reported last month a spike of over 24M daily spam messages related to the novel coronavirus.

Related to the behavior of vendors, I saw (in our client data) a drop from 28% down to 13% in response to a basic “request for data.”  Which begs the question… “Why are so many vendors ignoring common data requests?”  I also recognized where the percentage of zero-balance statements submitted from vendors had increased 44% over the typical baseline numbers that we are accustomed to seeing.  This is a clear indication that vendors are either withholding information or they’re reconciling their accounts without the hospital’s input.  I also saw an unprecedented increase in messages from vendors that outright stated they would be applying open credits and cleaning up their accounts.

The strange vendor activity described in the above paragraph is supported in a U.S. Chamber of Commerce report from June 3, 2020 which asserted that 20% of companies had already gone out of business; 57% were worried they would have to go out of business and 44% of companies were feeling uncomfortable about their cash flow position.  So, it’s not a surprise that vendors are suppressing credit information or reconciling their accounts on their own. (Please note, you can reverse this trend and SpendMend has several strategies to help you recapture those otherwise lost credits).

From the transactional data, I noticed some even more alarming statistics that spoke directly to an increase in payment errors and a decrease in internal processing compliance.  Specifically, I saw where – in only three months – there was a 28% increase in the incidence of duplicate payments and a 29% increase in the volume of off contract spend.  Just consider how drastic those volumes are and this is just the beginning…  Conservatively, these numbers already translate into million-dollar losses at most U.S. hospitals.  As these numbers spike, internal investigation and resolution is on a downward trend.

Truly, the examples listed above are only a sample of the content we shared in the webinar – which was only a small portion of what we’re seeing in the clients’ data.  And as shocking as a lot of those trends may seem, I have to admit that I am not entirely surprised.  I’ve understood for a while that the P2P cycle in a large healthcare network is often disjointed and as a result very elusive dark datasets can emerge in the many gaps that widen between departments and locations.

I’ve also come to learn that presence of dark data is even more pronounced in the healthcare industry because of a series of pressure points that I refer to as the “Three C’s.”  Change, Complexity and Compliance.  You can learn more about that concept here: https://www.linkedin.com/feed/update/urn:li:activity:6625783662342479872

All is not lost, however.  With the realization that these hidden reasons exist, we can continue to inspect the trends and analysis and begin to formulate strategies to reverse the trends and put U.S. hospitals back on a path of cost-savings and profit recovery.

Borrowing heavily from my discussions with key clients – I ended the presentation with a couple of tested ideas and projects that hospitals are using to improve their situation and to greatly reduce the loss of hard dollars.

For more information on this topic and for tips on how to address the hidden issues that are hurting P2P cycles in healthcare – view a free download of our webinar here: https://register.gotowebinar.com/recording/3138529960732615938

The Positive Influence of Supply Chain into the Recovery Audit Process

SpendMend Team

Written By: Nash Shook, nshook@spendmend.com

Tucked away in woodsy, western North Carolina, I grew up in a progressive but small-town healthcare household.  My mother was a CRNA in our local hospital. My dad was the Supply Chain Director at the hospital in the next town over. I spent the summer of my Freshman year in high school working as a clerk for my Dad shuttling supplies and putting away inventory. Little did I know then that I would stay the course and pursue a career through various supply chain leadership roles.

When I was in college, to pass time while doing laundry, my roommate, Greg and I took up juggling tennis balls against a black painted wall in the basement of our dorm. Looking back, juggling is considered a perquisite skill I have always tethered to supply chain leaders. There are too many important duties to balance, each requiring intermittent attention to advance the progress and yet, always needing some level of management involvement.

The supply chain leaders I interact with represent the most strategic clients to our firm and come from large health systems. Central to their success is their ability to balance the day to day challenges as well as giving vision to how they lead areas of logistics, procurement, finance, operations, patient care and other support departments.  here are large annual saving targets, attending to critical product shortages, creating sourcing and delivery efficiencies in high-cost, high demand departments, developing staff for growth and staying ahead of expansion needs.  But what is their influence and interest in the exhaust of a recovery audit?

Recovery audits are normally directed toward and lead by the Accounts Payable leadership, and rightfully so due to the extensive review of systems internal and external around the P2P process. For supply chain leaders, recovery audits are not in their top 10 lists, but their involvement has demonstrated they can have a positive impact to their organization.

There are tremendous downstream efficiencies for supply chain, especially since supply chain provides coordination of the P2P across all departments. In most every engagement, we find that compliance (really, a lack thereof) to utilizing the return to vendor module will generate at least a third of the recoveries we find. Many times, that compliance is harder to correct without supply chain’s involvement. Recovery audits for accounts payable as you can imagine has a different exhaust. Why is that different?

I believe it’s twofold. The audit firm’s deliverable has historically been more geared to address AP-oriented issues: preventing duplicate payments, efficiencies around invoice processing, gaps in processes and aligning systems so records are reconciled properly.  There’s so much AP-speak going on, the insights that are of value to supply chain get lost in translation.

It’s also because Supply Chain needs are around building progressive value around cost reduction and process efficiencies, so their focus can be at times more to the business imperatives of the health system: keeping up with growth demands, pursuing large savings goals, developing a clinical value analysis approach to product management, etc.

For supply chain, recovery audits dig deep within products returned and whether or not the credit is properly documented. As mentioned earlier, returns not deducted is one of the top three findings within recovery audits, many times the highest.

Several supply chain executives have indicated to me that product returns are policy driven regardless of which department is issuing the return, so no sole department bears oversight.  However, supply chain leaders want to ensure they support and encourage ways to increase adoption and compliance to the process.

Recovery audits provide a layer or root cause to highlights this lack of adoption:

  • Which hospitals in your system are not utilizing the ERP to chart returns?
  • What departments have the lowest level of compliance?
  • Are vendors being asked to manage returns?
  • What does non-compliance to system-based returns costs the health system?

There’s another diamond in the rough benefit I’ve not mentioned and that’s the contribution that recovery audits provide in operational improvements.

It was referenced earlier that much attention is given to the recovery dollars captured and returned. It is a critical reason behind conducting an audit but unto itself, it’s a starting and stopping point. It’s finite, it stands alone and is merely transactional.

Shouldn’t the real value to the health system be understanding the drivers behind the financial leakage to begin with?

We say all the time that every health system has leakage, but to what degree and to what benefit is having a financial operating system if regular maintenance isn’t performed and if diagnostic measures that detect problems aren’t corrected? Recovery audits that provide detailed root cause analysis can enable leaders across the financial and supply chain areas to know what needs to be done to prevent costly process gaps from growing beyond acceptable levels.