Recently, Healthcare Innovation Editor-in-Chief had the opportunity to speak with Chaun Powell, a leading executive at the Charlotte-based Premier Inc. Powell’s current title is group vice president at Remitra, Premier’s eInvoicing and ePayables platform. Powell has 18 years’ experience in strategic leadership, commercialization, marketing, national accounts, business and corporate development, and group purchasing organization (GPO) negotiation. As the group vice president (GVP) of the payables platform for Premier, Powell is responsible for setting the strategic direction and realizing the tactical execution of leading the Premier team that is driving transformation in the antiquated space of invoicing and payment in healthcare. Formerly the GVP of strategic supplier engagement, Powell was responsible for all supplier relationships across 4,000 healthcare suppliers and 1,300 contracted suppliers. Hagland spoke with Powell regarding the current landscape around finances for hospitals and health systems nationwide. Below are excerpts from that interview.
When you look at the overall landscape around finances for hospitals and health systems across the U.S. healthcare system right now, what does that landscape look like to you?
There are several compounding factors impacting the financial situation for provider organizations right now. When you look at the compounding issues, it starts at inflation, which is at a 40-plus-year high. And then there’s the fact that a quarter of hospitals accepted advanced Medicare payments through COVID that are now ending; and so, decreased cash payments; and now, Medicare cuts. And then you think about labor costs. One statistic that I frequently share that really paints the picture for me in that area: we do executive surveys across our membership every year, and we get an over 80-percent-response rate, which is exceptional. And right now, 78 percent of survey respondents are focused on their primary pain point being labor challenges, particularly shortages. The highest number we had ever seen was COVID, ten points less, the year before. So you take Medicare clawbacks and cuts, labor costs, and inflation, many organizations that were typically at a 1- or 2-percent revenue margin, and are now in the negative. And a significant percentage are finding themselves challenged to find a way to the black.
When it comes to labor costs related to shortages, one of the things that happened early in the pandemic is that, by sending everyone home to work remotely, we inadvertently ended up in a situation in which hospital-based organizations are now competing nationwide to attract and retain some IT staff and revenue cycle management and business office staff, so the recruitment challenge is not just about nurses. Your thoughts?
Yes, that’s right; while the clinical aspect has received considerable attention, IT and revenue cycle have not yet. And AP and AR [accounts payable and accounts receivable] in the finance office also, I would add. And competing nationally for IT professionals—for some of them, we’re actually competing globally and are seeing outsourcing domestically and overseas, including entire departments to third parties. And rev cycle and AP/AR—that’s an area that’s never been treated as a strategic opportunity. Pre-pandemic, supply chain was seen as a necessary segment of the business, but didn’t have that strategic importance, wasn’t seen, until COVID. Now we’re seeing sophistication of automation for RCM and AP/AR, and that automation can help a great deal.
What are the smart hospital leaders doing right now? How are others stumbling?
On labor, first: those who are savvy with their AP/AR and rev cycle, are recognizing that tremendous burdens are introduced across HC in the US based on paper dependence and lack of automation. It’s estimated based on our internal data that 7 of 10 invoices delivered to our hospital members are non-digitally delivered. By the same token, they return the favor to our suppliers by paying 82 percent of the time by paper check. Where most consumers don’t even know how to find their checkbooks anymore, 8 out of 10 payments to suppliers are by paper. We estimate that over $22 billion in waste is tied just to the billing of healthcare systems.
Why are so many processes still paper-based?
There are many reasons that contribute to the lack of adoption. First, healthcare in general is notoriously slow to adopt. Two, when you look at the investments, most institutions have had to allocate funding to things like EMRs. They haven’t had the unreserved dollars to spend on automation for AP and AR. Savvy leaders are finding ways to make those investments now. Retail, automotive, even grocery—our invoicing and ordering platforms are so antiquated in healthcare; that’s part of the reason we’re dealing with such technical debt.
What kind of mindset should hospital and health system leaders have in this shifting landscape?
We’ve got to take a more progressive approach. Most institutions utilizing ordering platform with an item master that they can order off of—the majority of hospitals have their own item masters. Anytime a single supplier updates a single item in their catalog, that item has to go through changes at all the hospitals and surgical centers. So groups of hospitals will need to collaborate and lift platforms up and leverage technology, so that if a supplier makes one change, they’re not having to update thousands of item masters.
How might technology adoption be used to bend the cost curve?
So, here’s the thing: What do GPOs do? They’re either moving product—and all GPOs have the contracts to move product; or they’re also moving data—and certainly, Premier has made significant investments in supporting healthcare systems, with our access to very robust purchasing and outcomes data; but the third area that GPOs haven’t gotten engaged with yet, is moving finances. We’ve now made a commitment to guarantee the payments of invoices, to drive change. We need to automate, and to fix the broken systems that are underlying, that lead to so many match exceptions in those invoices. The evolution naturally pushes us to make changes in contracts, data, and now, match exceptions, to deliver for our communities.
What will be the hardest thing for hospital leaders to do, in that context?
There is a tremendous need for healthcare in particular, the business side of healthcare in particular, to overcome the challenges that have kept us as slow to adopt new technologies as any industry I’ve been a part of. The technology adoption cycle in HC is 17 years; in the cellphone industry, it’s 11 months. We need to find a means to more rapidly embrace technological platforms and capabilities.
How will things evolve forward over the next few years?
It’s interesting. When we first, pre-COVID, did the analyses and found that 85 percent of payments were done by paper check, and learned during COVID that a lot of departments were limited because they were working from home, we anticipated a huge shift in the migration to automation, esp. around payments; in March of this year, we only saw a 3-point shift, from 85 percent to 82 percent. So the catalyst for change has got to be something bigger than what we’ve seen before in the industry. And at Remitra, we’re going so far as to say we’ll guarantee the payment on the invoice, so we can drive change. By merely migrating to a digital platform—the EDI technology that we’re still trying to embrace in the industry is from the 1960s; and yet only 5 percent of suppliers in HC are EDI-capable. We’re going to have to make some leapfrog technological advancements to eliminate our technological debt.
Is there anything else you’d like to add?
Just that I have a sense of optimism that we’ve got the tools available to fix the challenges and woes we’re facing, and it’s up to us, the stakeholders, to bolster those changes. There’s enough visibility now into the business challenges we face in healthcare, that I think it will finally get the attention it deserves.