Health Reform’s Impact on AP Costs

Posted by Mark Brousseau

The new federal health reform law will drive accounts payable (AP) costs higher over the next two years according to industry stakeholders who responded to a survey at this week’s IAPP-TAWPI Healthcare Payments Automation Summit (HPAS) in Boston. The survey was conducted during the conference by IAPP-TAWPI, APQC and PRGX. Survey respondents included healthcare payers and providers; third-party services providers (such as medical billing firms); banks; and IT vendors.

More than half (51.9 percent) of the HPAS attendees who responded to the survey predicted that health reform will result in higher AP costs over the next two years, while 48.1 percent of survey respondents said that AP costs will remain unchanged. None of the conference attendees that responded to the survey believe that short-term AP costs will decrease as a result of health reform.

HPAS attendees who responded to the survey were more divided on the long-term impact of health reform on AP costs. More than one-third (36.2 percent) of survey respondents believe that health reform will drive AP costs higher long-term (defined in the survey as over two years from now), while an equal percentage of respondents believe AP costs will remain unchanged. On the bright side, 27.7 percent of respondents predicted that health reform will result in lower AP costs long-term.

Among the other findings of the HPAS survey:

… Data integration, processing performance, and integration of physician data were the top healthcare AP challenges identified by respondents, followed by cost pressures, manual data entry (which drives costs up), and the ability to track and report evidence-based improvements in cost.

… Most survey respondents (57.7 percent) believe that health reform will have no impact on AP processing performance over the next two years, while a plurality of respondents (39.6 percent) predicted that health reform will result in lower AP processing performance long-term.

… Nearly two-thirds (64 percent) of survey respondents believe that health reform will have no impact on AP late payments and error rates. Long-term, survey respondents were more divided, with a plurality (38.3 percent) predicting that health reform will have no impact on AP late payments and error rates, 31.9 percent predicting that health reform will result in more AP late payments and errors, and 29.8 percent predicting that health reform will help decrease AP late payments and errors.

… HPAS attendees are not optimistic about health reform’s impact on IT systems costs. Nearly two-thirds (62.3 percent) of respondents believe that health reform will drive IT systems costs higher over the next two years, while 37.7 percent of respondents predicted that systems costs would remain unchanged. None of the respondents believe that health reform will result in lower systems costs over the next two years. Long-term, half of the survey respondents believe that health reform will result in higher overall IT systems costs, while 18.8 percent believe IT systems costs will decrease. About one- third (31.3 percent) of respondents predicted that systems costs will remain unchanged.

“Big changes are coming in healthcare, and AP organizations must ask themselves if they are ready,” APQC Analyst Neville Sokol told HPAS attendees. “At times like these, organizations are turning to data and best practices to help them solve problems, improve processes, or design something better. These tools can help make sense of a complex world, and provide a roadmap for moving forward.”