Unifying the supply chain and accounts payable: How MUSC Health is revolutionizing revenue streams

As geopolitical, economic and cybersecurity issues continue to pose risks to health system supply chains, leaders at top organizations weighed in on a shared priority – making supply chains more resilient and sustainable.

At the forefront of these efforts is the Medical University of South Carolina (MUSC), a premier academic health center dedicated to continuous improvement and innovation. Leaders at MUSC Health, the statewide clinical enterprise of MUSC, echoed the importance of reinforcing the resilience and sustainability of its supply chains in today’s world. This includes strategic measures, such as the integration of accounts payable (AP) into its supply chain operations to help improve resource utilization, automate invoicing and streamline AP processes. Under the leadership of Brandon Droz, associate vice president of supply chain, MUSC Health and GHX worked toward achieving these objectives, underscoring both organizations’ commitment to implementing cutting edge automation solutions that help enhance efficiency and mitigate risks in supply chain processes.

To learn more about this innovative initiative, Becker’s Healthcare recently spoke with Droz as well as GHX leaders Jamie Frame, senior director of business development and Aaron Hager, director of business development.

Integrating AP and supply chain generates internal and external value

Historically, many organizations have separated AP and supply chain functions. Currently, there is a trend toward integrating them. “When we look at some of our most progressive customers, they are disrupting the independence between AP and supply chain,” Ms. Frame said. “The focus becomes driving collaboration and understanding the big picture.”

By moving AP into the supply chain, MUSC Health can improve the organization’s alignment between its procurement decisions and financial obligations. There is much tighter integration between procurement and payment processes.

“We now have end-to-end visibility,” Mr. Droz said. “That’s driving greater efficiency and control over the procure-to-pay process. Internal alignment allows us to break down silos between different functions in the supply chain and to develop shared goals and incentives.”

Since MUSC Health’s AP department now better understands the goals of sourcing and contracting more fully, the team processes and pays invoices in an even more timely way. This further increases MUSC Health’s credibility with the supplier community. “We are in a better position to go back to suppliers to negotiate not only better pricing, but also tighter terms and conditions when it comes to supply availability,” Mr. Droz said.

GHX has found that the value generated by integrating AP and supply chain can extend beyond healthcare organizations to the broader healthcare ecosystem. “As organizations like MUSC use process automation to tighten the supply chain cycle through payment, it delivers value back to the supplier community,” Mr. Hager said. “What’s good for one is good for all.”

Technology partners with industry expertise are essential for automating and transforming AP work

In addition to moving AP into the supply chain, MUSC Health decided to leverage technology to help streamline and automate key AP processes.

“When discussing invoice processing, payment reconciliation and reporting, a clear benefit of investing in modern AP automation solutions is marked improvement in accuracy, efficiency and compliance in addition to a reduction in manual errors and processing time,” Mr. Droz said. “That is critical for systems such as ours.”

A key to MUSC Health’s success was finding the right provider for modern technology solutions that aligned with the organization’s strategic goals. “GHX has been fantastic to work with,” Mr. Droz said. “They understood our needs and mission and explained what we would achieve by working with them. It’s been a wonderful association. They’ve provided us with the expertise, resources and support needed to navigate some of the complex integration initiatives.”

Another contributing factor in MUSC Health’s success was the team’s focus on electronic invoicing as a way to reduce the cost of paper invoices. “As a new leader in the organization, Brandon drove toward the overall goal of providing a best-in-class digital supply chain to MUSC,” Ms. Frame said. “That included getting to 90% of electronic invoicing that delivers a paperless and automated process.”

Unifying AP and supply chain delivers savings and other organizational benefits

By bringing AP under the supply chain umbrella, MUSC Health continues to improve its on-time payments dramatically.

“Thanks to strategic alignment with our category managers, spanning from sourcing to AP, we have minimized errors and strengthened contract negotiations,” Mr. Droz explained. “Our timely payments allow us to leverage prompt-pay discounts with suppliers, underscoring another advantage of automation.”

With GHX, MUSC Health has also increased automated invoicing. “To go from a manual invoice to an automated one adds up to significant savings,” Ms. Frame said. “Health systems choosing an end-to-end automated path have shown that only 7% of their invoices require manual correction, which is a massive decrease from paper-based exception handling. AP automation can put them on a path to more touchless, paperless invoicing.” Mr. Droz echoed the sentiment, “Buyers can focus on where we are spending offchannel and where we can optimize contracts.”

In addition, incorporating automation technology into AP processes can help improve employee engagement and reduce turnover. “When you add automation and the best payment execution, organizations start to drive the employee experience,” Mr. Hager said. “By having partners like GHX as a back-office support system, it helps free up time to assign FTEs to more strategic roles.”

Mr. Droz joined MUSC Health in September 2023. Since that time, AP has reduced its vacancy rate. “These jobs were so transactional that it was hard to retain talent,” he said. “AP is currently projecting to end the fiscal year with only 5% turnover. We managed the vacancy rate by demonstrating how valuable AP roles can be.”

When MUSC Health integrated AP positions into the supply chain, the AP team gained a deeper understanding of the broader impacts of their work, both upstream and downstream. With the implementation of more automation, they were also able to participate more actively in supplier strategy discussions and organizational planning.

“These employees recognize the potential for career growth within the supply chain,” Mr. Droz said. “In our recent employee engagement survey, both AP and Procurement achieved Tier One status, marking the highest level of satisfaction.”

The future is bright for MUSC Health’s supply chain

According to Mr. Droz, as part of its ongoing strategic initiatives, MUSC has been actively pursuing strategies to bolster operational efficiency and fiscal stability through comprehensive P2P automation. “GHX offers tailored solutions to address hospitals’ digital transformation needs. They have provided great insights and peer benchmarks to help us measure and optimize supply chain performance across the P2P continuum.”

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