The healthcare sector is tearing off the band-aid in a quickening transformation of B2B payments. As these organizations grapple with the complexities of accounts payable (AP), the drive for efficiency and security has never been more urgent. What to do?
Call it a ‘code green.’ There is a new (some would say ‘renewed’) urgency around upgrading archaic business payments in this massive, crucial vertical.
The shift is being propelled by a convergence of factors. The fragmentation of legacy tech is a drag here as it is elsewhere; the volume and velocity of transactions is increasing; and the sophistication of fraud threats is growing. All of these demand new approaches, quickly.
Healthcare as an industry is no stranger to payments innovation, yet it remains dependent in spots on pre-pandemic payables solutions that have already aged out. The task now is balancing needed modernization against operational risk and regulatory rigor.
Automation has emerged as a game-changer in this. By streamlining workflows, consolidating payment types, and enhancing visibility, automation is realizing the promise of reduced errors, improved reconciliation, and stronger supplier relationships.
But modernization journeys are not without perils, according to Paige Turpin, Channel Sales Director at Bottomline. Security concerns, data management obstacles, and the need for seamless integration with differing systems are all top of mind for finance leaders.
Complexity and Innovation
Unlike their consumer counterpart, B2B payments in healthcare have a decent track record of innovation, despite the complexity and fragmentation of a colossal AP ecosystem.
Turpin says the sector was “first to adopt virtual card, and they've been one of the fastest growing verticals since 2020 to move away from paper check completely into the ACH space." This early adoption has positioned healthcare organizations at the forefront of digital modernization.
However, the move toward automation and electronic payments has introduced new challenges. As Turpin explains, “clients are looking for faster ACH payments with real-time automation. And with the substantial growth of ACH programs comes maintaining bank details or remittance details for suppliers."
And the transition from paper to digital processes, like the upgrading of legacy electronic methods, while beneficial, exposes organizations to new security risks, including business email compromise (BEC) and fraud attempts targeting sensitive healthcare data.
The Impact of Payables Automation
Healthcare organizations have long managed different payment types, such as checks and ACH, as completely separate workflows, owned by different teams. It’s a common setup.
But this approach creates inefficiencies and limits visibility. “Historically, these payment types operated in silos with different reconciliation processes and supplier touch points," Turpin says.
Now, advances in payables automation are rapidly altering the landscape by consolidating payment options. This is crucial for compliance, audit trails, and reducing human error. Turpin says it’s also streamlining reconciliation and visibility into payments. “Working with a single file from an AP team allows different payment types with the same remittance data to be used for all suppliers,” she says. “It leads to fewer calls and less burden on AP teams."
Financial Optimization and Better Supplier Relationships
Automation is not just about efficiency. Financial optimization is always part of the goal. Turpin notes that “when payments automation becomes a primary focus, it can be used as a strategic lever for finance, and for supply chain as well.”
With the visibility gain from a single workflow, treasury and supply chain can coordinate strategies, manage payment terms, and capture supplier discounts more accurately. Suppliers can then choose how they prefer to be paid. “Having access to remittance details associated with preferred methods strengthens relationships," she says.
The ability to manage all payment types through a single workflow further ensures that discounts and terms are correct, letting teams get on with enrolling suppliers in rebate-generating programs, such as virtual card. This approach not only optimizes cash flow; it (again) improves supplier relationships and negotiation power.
Automation, Security, and Future Outlook
Healthcare is modernizing faster in the post-pandemic era than before, perhaps not wishing to be overwhelmed again. And many looking to automate B2B payments are linking up with payment service providers (PSPs) for specific benefits.
“Partnering with PSPs is one of the easiest ways for healthcare to automate B2B payments,” Turpin says. Automating payables and the associated data reduced AP effort as well as human error. She says PSPs also help with things like supplier calling campaigns, reducing check payments, and increasing rebate and discount opportunities.
Security is another top priority as automation advances. Here again, Turpin says some PSPs store and validate bank account and ACH information for suppliers. It removes some friction and touchpoints from the process, and yet payments are more secure.
That enhanced security, combined with proactive continuity planning and the removal of outdated payment rails, puts healthcare companies in a position to safeguard more transactions in bigger payment flows. It’s future-proofing operations, without disruption.
Turpin also sees this vertical dropping its paper fixation with more purpose lately, saying, “moving off of paper checks and into automation will continue, but with more scrutiny. Safeguarding and securing all transactions can become more of a focus."
As healthcare groups increasingly turn to payment partners and automation for speed to market, the focus is shifting to encryption, verification, and expert support in managing AP.