Why Automation is Critical for Healthcare Finance Operations
By Mike Raia Posted October 20, 2021
In the COVID-19 era, healthcare finance operations need to be as efficient and effective as possible. Automation can help.
The pandemic has put a serious financial strain on many providers and healthcare systems, which means finance operations need to be streamlined. What is one critical step in this streamlining? Shifting healthcare finance operations away from manual processes and towards automation.
Automation is an ongoing trend across numerous industries, and there is no reason healthcare finance operations should be any different. Automating finance operations can drastically increase accuracy, speed, and other metrics for providers and health systems.
What are the main areas of healthcare finance operations where automation makes a difference? And how specifically can automation help in these areas? We address these questions below.
Benefits of CapEx Automation for the Healthcare Industry
A prime area where healthcare providers can introduce automation is their capital expenditures (CapEx) workflow. The processing of CapEx requests and approvals is a huge burden for many companies. This is especially true in healthcare, with the high demand for capital and equipment at hospitals and health systems.
Consider some of the main benefits of moving away from manual processes, and toward automation, in healthcare CapEx workflows:
- Increased Accuracy: When performed manually with Excel spreadsheets and similar tools, the CapEx request process at most healthcare facilities is rife with opportunities for errors and missing information. An automated process can perform calculations, prompt for all necessary information, and check all information for accuracy.
- Standardized Workflow: Automating the CapEx workflow can standardize the CapEx process across different departments, leading to smoother operations.
- Upgraded Approval Process: When CapEx requests need approvals at different levels of the hospital or health system, they can be automatically routed to the correct people or series of people. Requests in certain categories, such as those above a certain dollar level, can be elevated for approval according to internal standards. And automated notifications and reminders can keep the approval process moving forward. More complex approvals can use an approval matrix to manage complex logic and approval scenarios.
- Visibility: An automated system can allow instant visibility into the status and progress of any CapEx request. Automated reporting also gives management visibility into the CapEx workflow and the ability to make incremental improvements in the overall process.
- Audit Trails: Automated CapEx systems can create audit trails for every action, so that any associated information is captured, along with time stamps. This is essential for both internal use and regulatory compliance.
- Communication and Collaboration: Automation can also extend to CapEx communications so that requests for further information are automatically triggered when necessary. A centralized location for comments allows for real-time collaboration on decisions.
Especially in an age of increased remote work, all of these functions are critical. A healthcare finance operations team cannot afford to pass up these benefits of CapEx automation.
Automation Eases the Burdens of Expense Management
Expense management is another part of financial operations where automation can make all the difference. When a healthcare facility seeks to manage payment of reimbursable expenses incurred by employees, it is not simply a matter of dollars and cents. Whether the expenses are for work-related travel, entertainment, work-from-home expenses, or other reimbursable items, employee morale and administrative burdens are also key concerns here.
The issues with traditional expense management can be seen by comparing it with automated expense management.
Traditional Expense Management
With traditional expense management, conducted with manual processes, paper records and spreadsheets are the tools of the trade. The employees gather paper receipts for their expenses, which are submitted with expense reports for approvals at various levels, such as the employee’s supervisor, executives, and the accounting or finance team. Expenses may be rejected and sent back for revision. Receipts must be verified and entered into the system, and the expense report posted in the provider’s accounting system, before reimbursement can be authorized and issued to the employee.
Every one of these steps is time-consuming and error-prone with manual processes. In addition, they result in unpredictable spending patterns which are difficult to manage from a high-level perspective.
Automated Expense Management
An automated expense management system can allow employees to submit expenses from any web browser or mobile device. The system can verify the healthcare facility’s expense policies in real time and immediately advise of any violations. Approvals can be routed automatically, depending on the criteria for approval. Providers that automate their expense management will reap immediate benefits, such as the following:
- Elimination of paper records and spreadsheets
- Increased accountability.
- Reduction in expense fraud.
- Less duplicate entries and duplicate payments.
- Increased speed of reimbursements.
- Less administrative burden on accounting and finance departments.
- Real-time visibility into facility-wide expense data.
- Less administrative burden on physicians, clinical staff, and administrative staff.
Any provider that fails to employ expense management automation is also missing out on these obvious rewards.
Automation of Other Healthcare Finance Operations
Automation can be a boon in various other areas of healthcare finance that pose hurdles for administrative efficiency and accuracy.
- Payroll Management: An automated payroll system can provide automated payroll calculations, tracking of working hours, payroll tax calculations, and increased speed. The system can also automate and incorporate changes in salaries and wages.
- Financial Statements and Reports: The request-and-approval process for financial statements and financial reports can be automated and streamlined.
- Journal Entries: The journal entries that record business transactions in the provider’s accounting system can be automated to simply and streamline entry and tracking.
- Contract Closeouts: Automated processes can confirm all contract obligations have been fulfilled before final payment is made and the contract closed out.
And of course, all of these automated functions lead to increased real-time visibility and reporting capabilities.
Choosing the Right Automation Solution for Your Financial Operations
In light of the ongoing need for efficiency, accuracy, and accountability in healthcare finance operations, there is no shortage of ways in which automation fits the bill. The selection of the best workflow automation software is a critically important step. If a healthcare facility can find a tech solution that addresses all the different facets of its finance operations, it is well on its way to a higher level of financial performance.
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