going for the green “e”payment’s service helps you move from paper to electronic payments...
TRANSCRIPT
Going for the GreenGoing for the Green
“E”Payment’s service helps you move from paper to electronic payments
“E”Payment’s service helps you move from paper to electronic payments
Vanessa Taggart
Paula StrolloSupply Chain Managememt
Vanessa Taggart
Paula StrolloSupply Chain Managememt
Who We AreWho We Are
■ Largest academic community hospital in PA
■ Largest Level 1 Trauma Center in PA
■ Certified Stroke Center■ Employees – 9,500 Medical Staff – 1,100+ Nurses – 2,334
■ Largest academic community hospital in PA
■ Largest Level 1 Trauma Center in PA
■ Certified Stroke Center■ Employees – 9,500 Medical Staff – 1,100+ Nurses – 2,334
■ Magnet Hospital■ 143,850 ED visits / 49,300 admissions■ 988 acute care beds■ 3 hospital campuses■ Revenues over $1 Billion
■ Magnet Hospital■ 143,850 ED visits / 49,300 admissions■ 988 acute care beds■ 3 hospital campuses■ Revenues over $1 Billion
Supply Chain ManagementSupply Chain Management
■ Synergies between Supply Chain and Accounts Payable
– There is significant overlap between Supply Chain Mgmt & Accounts Payable
– Typically work with the same suppliers and internal customers
■ Synergies between Supply Chain and Accounts Payable
– There is significant overlap between Supply Chain Mgmt & Accounts Payable
– Typically work with the same suppliers and internal customers
Supply Chain ManagementSupply Chain Management
■ Value in tight connections within the P2P process
– Accountability for entire P2P cycle– Shared Vision – Goals aligned– Leverage relationships to bring overall
value to contracting• Pricing/Terms/Compliance/EDI/Payment
– Accounts Payable has access to vendors
■ Value in tight connections within the P2P process
– Accountability for entire P2P cycle– Shared Vision – Goals aligned– Leverage relationships to bring overall
value to contracting• Pricing/Terms/Compliance/EDI/Payment
– Accounts Payable has access to vendors
Supply Chain ManagementSupply Chain Management
■ Value in tight connections within the P2P process
– Accounts Payable “owns” the vendor master• Assures compliance to government
regulations
– Internal Audit findings addressed with full continuum of Supply Chain for process improvements
■ Value in tight connections within the P2P process
– Accounts Payable “owns” the vendor master• Assures compliance to government
regulations
– Internal Audit findings addressed with full continuum of Supply Chain for process improvements
Supply Chain ManagementSupply Chain Management
100% of Supply Chain mission ends in a payment… contracting, purchasing, inventory etc…
■ 89% of AP’s workload is directed by Supply Chain processes
– 54% Purchase Order– 18% Contracts– 17% Direct Procure (VISA)
100% of Supply Chain mission ends in a payment… contracting, purchasing, inventory etc…
■ 89% of AP’s workload is directed by Supply Chain processes
– 54% Purchase Order– 18% Contracts– 17% Direct Procure (VISA)
Supply Chain/AP ConnectionSupply Chain/AP Connection
First Half FY10 Invoice Lines by Type
PO Lines54%
Patient Refunds4%
Visa Transactions17%
EE Reimb3%
MM Contract Lines18%
Chk Requests4%
LVHN Credit CardsLVHN Credit Cards
■ In place >10 years– Significant growth over time– Average transaction amount = $398– 77,000 transactions annually = 77,000
less invoices – 5-6 FTE’s needed for that many invoices– 77,000 @ $3.18/per invoice
• $245k additional costs
■ In place >10 years– Significant growth over time– Average transaction amount = $398– 77,000 transactions annually = 77,000
less invoices – 5-6 FTE’s needed for that many invoices– 77,000 @ $3.18/per invoice
• $245k additional costs
RebateRebate
■ Rebate for FY 09 was only on credit card transactions
■ FY 10 we will realize additional rebates thanks to “E”Payment’s
■ Rebate for FY 09 was only on credit card transactions
■ FY 10 we will realize additional rebates thanks to “E”Payment’s
LVHN Accounts PayableLVHN Accounts Payable
■ FY 2009– 48,000 checks issued– 522 “E”Payment’s– 2.3 average invoices per payment– $12,200 per payment (“E”Payments’s & Checks)
– 112,000 invoices processed– 74,000 credit card transactions– $0.47 processing cost per invoice
■ FY 2009– 48,000 checks issued– 522 “E”Payment’s– 2.3 average invoices per payment– $12,200 per payment (“E”Payments’s & Checks)
– 112,000 invoices processed– 74,000 credit card transactions– $0.47 processing cost per invoice
LVHN Accounts PayableLVHN Accounts Payable
■ Rebate received annually– Helps pay for wages
– Helps pay for benefits & overhead
– Helps pay for supplies and other expenses
■ Without the rebate– Our invoice cost was around $3.18
■ Benchmarks range from $3.58 to $35**Aberdeen Group
■ Rebate received annually– Helps pay for wages
– Helps pay for benefits & overhead
– Helps pay for supplies and other expenses
■ Without the rebate– Our invoice cost was around $3.18
■ Benchmarks range from $3.58 to $35**Aberdeen Group
What is “E”Payment’s?What is “E”Payment’s?
■ Back end credit card– Vendor is given a credit card number– There is no physical card– The card is funded at $0
• Can’t decide to use it to pay an invoice
– Funding occurs when we transmit the payment
– Card is funded for what is payable
■ Back end credit card– Vendor is given a credit card number– There is no physical card– The card is funded at $0
• Can’t decide to use it to pay an invoice
– Funding occurs when we transmit the payment
– Card is funded for what is payable
How to run “E”Payment’s?How to run “E”Payment’s?
■ Using ERP system– Identify suppliers who accept
“E”Payment’s– Run basically same reports we run for
cutting checks– Do not print checks– Create a transaction file that is encrypted
and transmitted to the bank– Bank pulls into their web based system
■ Using ERP system– Identify suppliers who accept
“E”Payment’s– Run basically same reports we run for
cutting checks– Do not print checks– Create a transaction file that is encrypted
and transmitted to the bank– Bank pulls into their web based system
How to run “E”Payment’s?How to run “E”Payment’s?
■ Bank’s system– Creates a remittance email or fax that is
sent to supplier• Card is funded instantly
– Supplier uses previously communicated credit card number to process payment in their credit card system
– Supplier gets payment immediately
■ Bank’s system– Creates a remittance email or fax that is
sent to supplier• Card is funded instantly
– Supplier uses previously communicated credit card number to process payment in their credit card system
– Supplier gets payment immediately
Projected for FY10Projected for FY10
■ FY 2010 - Projected– 43,500 checks– 2,600 “E”Payment’s– 2.4 average invoices per payment– $11,000 per payment (“E”Payments’s & Checks)
– 110,000 invoices processed– 77,000 credit card transactions– - $0.24 processing cost per invoice
■ FY 2010 - Projected– 43,500 checks– 2,600 “E”Payment’s– 2.4 average invoices per payment– $11,000 per payment (“E”Payments’s & Checks)
– 110,000 invoices processed– 77,000 credit card transactions– - $0.24 processing cost per invoice
Team StructureTeam Structure
■ Project Team Resources
– Accounts Payable
– Supply Chain Analytics
– Information Services
– Finance
– Internal Audit
– Bank Personnel
■ Project Team Resources
– Accounts Payable
– Supply Chain Analytics
– Information Services
– Finance
– Internal Audit
– Bank Personnel
How are Suppliers SelectedHow are Suppliers Selected
■ Project Steps– Hospital provided file to bank to contact
suppliers regarding participation• File included contact information, address,
annual spend etc.
– Bank contacted suppliers with >$50k explained program• Supplier makes decision to participate
■ Project Steps– Hospital provided file to bank to contact
suppliers regarding participation• File included contact information, address,
annual spend etc.
– Bank contacted suppliers with >$50k explained program• Supplier makes decision to participate
How are Suppliers SelectedHow are Suppliers Selected
■ Project Steps (cont’d)
– Suppliers who chose to participate receive an
email confirming their participation
– LVHN copied on the email
– LVHN is provided credit card numbers by bank
– LVHN calls supplier with credit card number (no
plastic is issued)• Safe because card has $0 value
■ Project Steps (cont’d)
– Suppliers who chose to participate receive an
email confirming their participation
– LVHN copied on the email
– LVHN is provided credit card numbers by bank
– LVHN calls supplier with credit card number (no
plastic is issued)• Safe because card has $0 value
After the CallAfter the Call
■ Project Steps (cont’d)
– On the hospital side• Update vendor master
– Change payment code to drive payment to “E”Payment’s
– Assure contact information is updated
• Begin paying using “E”Payment’s in next payment cycle
■ Project Steps (cont’d)
– On the hospital side• Update vendor master
– Change payment code to drive payment to “E”Payment’s
– Assure contact information is updated
• Begin paying using “E”Payment’s in next payment cycle
LVHN RebatesLVHN Rebates
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FY 07 FY 08 FY 09 FY 10Budgeted
Rebate
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FY 07 FY 08 FY 09 FY 10Budgeted
Rebate
We are confident this will
be achieved.
Other SavingsOther Savings
■ Interest on cash float – we hold our cash longer– $57,000 annual estimate (first year)
■ Supplies– Fewer checks & envelopes
■ Postage– Supplies & postage savings
• $3,300 annual estimate (first year)
■ Staff time savings– NO sorting or moving of paper
■ Interest on cash float – we hold our cash longer– $57,000 annual estimate (first year)
■ Supplies– Fewer checks & envelopes
■ Postage– Supplies & postage savings
• $3,300 annual estimate (first year)
■ Staff time savings– NO sorting or moving of paper
Supply Chain Next StepsSupply Chain Next Steps
■ All areas of Supply Chain participate
– Add language regarding payment methods
– Extended payment terms for vendors who insist
upon a check
– Ask vendors who are looking for payment if they
participate
■ Go for the green
– Push “E”Payment’s NOT paper payments
■ All areas of Supply Chain participate
– Add language regarding payment methods
– Extended payment terms for vendors who insist
upon a check
– Ask vendors who are looking for payment if they
participate
■ Go for the green
– Push “E”Payment’s NOT paper payments
