Memorial Hermann Healthcare Blazes Innovative Trail

In a transformational era where resources are declining but demand for service is increasing, only the bold and innovative thrive—especially in the healthcare industry. A recognized leader within its industry, Memorial Hermann Healthcare (MHH) had...


In a transformational era where resources are declining but demand for service is increasing, only the bold and innovative thrive—especially in the healthcare industry.

A recognized leader within its industry, Memorial Hermann Healthcare (MHH) had to find new and creative ways to minimize costs while increasing quality services. Its strategic vision translated into the implementation of a state-of-the-art procurement and payment process to improve working capital, reduce processing costs, increase productivity and enhance customer service—a project known as Procure-to-Pay (P2P) automation.

A paperless world

It was clear to Memorial Hermann that the mainstream “All in One” P2P solutions in the market required significant cash outlays, were not customizable, and required extensive internal resources for deployment. For Memorial Hermann, its P2P Automation solution had to be configured to meet its business needs requiring specific expertise in the invoicing, workflow and payment arenas. In the end, the Project Team determined a “Best-in-Breed” approach was required.

After considerable due diligence, Memorial Hermann chose Direct Commerce as its P2P automation partner and American Express as its payment partner. The two solution providers would bring a new automated process—similar in concept to today’s online banking—to MHH suppliers.

The P2P automation project would coordinate suppliers and buyers into one synchronized pipeline for procurement, invoicing and payment. The solution would eliminate paper transactions, require business rule validation and end the era of manual data entry. Information would be synchronized and transparent between MHH and its suppliers.

The ultimate solution would be a secured online self-service portal where MHH suppliers could log into and view purchase orders; submit validated invoices; track invoice and payment status; search records; and quickly query MHH Accounts Payable (AP) in a real-time manner. All this functionality would be managed and stored in a centralized and secured online supplier self-service portal provided by Direct Commerce.

The driving rationale for automation

MHH faced a number of converging issues that required more resources to operate its bifurcated procurement and payment systems. The bottom line? MHH had to do more with less to meet such demands as:

 

¦ A rapidly growing healthcare system with additional operating units, purchases and payments

¦ Increased supplier expectations for prompt payments

¦ Increased communication visibility between Memorial Hermann and its suppliers

¦ Greater cash flow management needs

¦ Reduced staff to handle payment processing

 

Furthermore, calls from suppliers were increasing because of paper-based invoicing and check processing. The P2P automation project would address all of these issues to meet such goals as:

¦ Working capital stabilization and enhancement

¦ Reduction of data entry labor, phone support and processing errors

¦ Assurance of data synchrony/transparency between suppliers and MHH

The working capital goal would be achieved by moving more than 500 suppliers to an electronic payment method. The reduction of labor and processing errors would be achieved through the supplier self-service portal.

Implementation is half the battle

Initially, the MHH project team met weekly with P2P automation partner Direct Commerce to define the supplier self-service portal requirements and supplier on-boarding process. Direct Commerce then configured, tested and rolled-out the P2P automation portal. They also managed and conducted the supplier on-boarding process from start to finish which included all supplier communication, training and enrollment. Selected suppliers received a communication letter signed by MHH executives explaining the new P2P automation project.

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