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Managing Payments Across Multiple Constituencies

Health systems, hospitals, and practices routinely make four types of transactions to pay important constituencies: patient refunds, insurance company reimbursement adjustments, supplier payments and employee wages. It is a diverse payment stack buffeted by forces demanding greater processing efficiency and cost-effectiveness. This Industry Report takes a timely look at key issues, coefficients of change and available solutions in the payments arena.

Four Priorities Influencing Payments

Four urgent healthcare industry objectives frame decisions about Accounts Payable (AP) execution (Figure 1).

cost control, patient experience, competitive positioning, growth

View PDF of Figure 1[PDF]

Control costs 

Many providers incurred substantial losses during the pandemic due to rising labor and supply expenses. The problem persists, and Fitch Ratings describes a “deteriorating” environment in which labor costs “have been reset at a permanently higher level, the remedying of which will take all of 2023 and likely beyond.”1 Health systems need “unrelenting cost discipline.”2 A number of organizations “will have to rely on their financial reserves to carry them through until conditions improve.”3

Deliver convenient experience

Offering a convenient, positive experience across the patient’s entire healthcare journey is a driving force for healthcare organizations. The patient financial experience has been a particular focus. Consumer surveys demonstrate the need:

  • More than one-third of consumers (35%) have changed or would change healthcare providers to get a better digital patient administrative experience.4
  • Nearly half of consumers (47%) would consider switching to hospitals with more efficient payment experiences.5
  • More than half (61%) of consumers told a Harris Poll they want their healthcare experience to be more like the customer experience of an online convenience service app.6

Employees increasingly expect payment convenience as well. The rising popularity of digital payment rails enables providers to offer real-time access to wages as a highly valued benefit.

Pursue growth

The Advisory Board notes that health systems “must combine both revenue growth and cost control efforts to create a comprehensive margin management playbook.”7 This year's CommerceHealthcare® Trends report detailed growth through service line expansion, telehealth, and continued movement of care to outpatient facilities. Many are pursuing hospital-at-home, using technology and caregivers to treat post-surgical, cancer, and other acute patients in their homes. Figure 2 suggests strong growth in the coming years.8

Will you deliver 50% of ambulatory chronic care virtually or in the home by 2028?

View PDF of Figure 2[PDF]

Strengthen competitive position

The provider landscape continues to shift dramatically. Major technology firms, insurance companies and retailers pose new competition for patients. These consumer-savvy entities have proven technological strength and ability to provide convenient, efficient experiences. Traditional providers must fine-tune operations to boost their competitiveness. 

Two Cornerstones of Payments Success

Before highlighting several AP solutions designed to meet the four priorities, it is helpful to understand a pair of requirements that form the cornerstones of payment efficacy. 

Need to automate financial processes 

Providers must continue their progress in financial automation for administrative simplification and performance improvement. Payments to patients, payers, suppliers and employees share persistent problems that create inefficiencies.

High volume

Consider these statistics reflecting high payment volumes:

  • Thirteen percent of healthcare AP teams process over 2,000 payments per month, doubling the percentage of other industries.9
  • Patient refunds reached an estimated $3.1 billion in 2022.10
  • Refunds to health insurers are growing, stimulated in part by aggressive payer “clawbacks” of overpayments. “Payers took back an average 1.4% of debit accounts receivable … each month from January 2021 to June 2022,” an analysis observes.11

Several forces are stimulating higher volumes, from rising patient self-pay to supplier expansion in the wake of COVID-19 disruptions. Burgeoning payments are challenging to manage and frequently generate backlogs.

Manual processes

Many revenue cycle management processes remain manual, consuming staff time and adding cost. Today’s healthcare labor shortages worsen the situation. Almost half of respondents to a survey said they have severe staffing shortages in revenue cycle and billing.12 Manual data retrieval from non-integrated information systems is also still prevalent. 


Paper handling is central to many financial processes. The issue crosses departments, evidenced by one study showing that 54% of administrative staff use paper forms at least once per day.13 Estimates peg the percentage of paper-based healthcare invoices at nearly 70%.14 

Paper checks are still widespread:

  • A study shows that 42% of healthcare AP teams issue more than half of their payments by check.15
  • Checks account for well over 70% of payments across industries.16
  • Refunds are a notable pain point: One study indicated that 82% of patient refunds are made by check.17


Complexity emanating from multiple sources can increase payment inefficiencies. For example, refund management involves both business and consumer payments with sometimes divergent requirements. Payables departments often “search for invoices across the organization” since health systems have many locations and facility types.18 The COVID-19 crisis prompted larger and more complicated supply chains. Complying with myriad regulations adds complexity.

Need to accelerate use of digital payments

A powerful success strategy couples automation with an array of digital payment rails. This approach accommodates the “growing digital appetite” that “continues to evolve and redefine customer engagement in the payments industry.”19 Consumers are using mobile payment technologies for all types of transactions, fueling market growth of 16% compounded annually.20 

Digital payments are fast gaining traction with almost 23% annual growth.21 ACH transactions have seen steady increases as well. Digital rails contribute positively to the four priorities of cost control, convenience, growth and advancing competitive strength.


Almost 80% of senior healthcare financial leaders see an “absolute need” for digital transformation to achieve “commercial stabilization and long-term survival of their healthcare organization.”22 Investment in “improving payments technologies and processes in the past three years” has been significant for 27% of surveyed healthcare leaders and somewhat significant for 53%.23 Several prominent system and services solutions that optimize payments automation merit prime consideration by all: 

Refund management systems (RMS)

Systems such as PreferPay® from CommerceHealthcare® assume complete life cycle management of refunds to patients and insurers. Providers’ financial systems convey refund requests to the RMS which then gathers information from patients through simple mobile or desktop software. Payment choice is the hallmark of a strong RMS, offering direct deposit, direct to debit card, e-check, or paper check. The system also returns accurate reconciliation data and can auto-batch multiple payments and supporting documentation for insurance/commercial accounts.

It is a solution that minimizes staff burden and cost and maximizes user convenience and speed. One alternative approach has been prepaid cards. These have proven problematic as users frequently incur fees for transactions, balance inquiries, stop payments and others. Overdraft penalties can also apply.

Supplier payments automation

Centralized invoice automation orchestrates an organization’s high volume of supplier payments regardless of payment mode (CommerceHealthcare® offers a solution in this category called Payment Hub). Such a system maintains exception-based workflows to let AP staff focus on complex issues rather than losing productivity handling routine transactions. Additional important features include:

  • Multimodal payment support (credit card, EFT, check)
  • Automation of scheduled and one-time payments
  • Consolidation of individual payables into a single file
  • Automatic reconciliation reporting

Placing a substantial percentage of vendors on the payments platform is vital to maximize savings and efficiency. That is best achieved by performing a thorough spend file analysis to identify candidates and intensive onboarding of accounts with their preferred payment options. Equally critical is to maintain vigilance by continuous enrollment of new suppliers.

Earned wage access (EWA)

Several hospitals have initiated programs that use electronic payments to allow employees “instant access to earned wages right after the work is performed, at the end of the shift, or upon completion of a project.”24 This “earned wage access” is gaining popularity. A 2021 Harris poll found that 83% of U.S. workers would like availability of earned wages at the end of each day.  EWA can clearly play a role in employee loyalty and retention. In a cross-industry study, 38% of employees who identified themselves as “stressed about finances” said they were looking for a new job.25

API-centric integrated platforms

Robust payment systems are enterprise-level platforms integrated with a provider’s existing financial systems. While file transfer methods can be used for data sharing, healthcare is rapidly embracing application programming interface (API) integration. Global API investment is expected to nearly triple by 2030 (Figure 3).27

Healthcare API market size, 2021 to 2030 (USD Billion)

View PDF of Figure 3[PDF]

The integrated platform approach is ideal as it yields “standardized, scalable enterprise solutions that enable healthcare organizations to avoid data risks and regulatory penalties while containing costs.”28

Strong services/trusted relationships

Providers today seek payments solution vendors who can form a collaborative relationship rather than a merely transactional one. Organizations need a financial partner who commits to promoting their success over the long term. Banks also help clients by bringing deep regulatory compliance understanding — which is especially critical, given still-emerging rules on financial technologies and services such as EWA.

Vibrant, productive collaboration requires vendor personnel with healthcare experience. They are able to surround payments technologies with services that minimize staff work. 

By the Numbers: Quantifying the Many Benefits

Aggressively automating trade and patient payments generates meaningful benefits and helps fulfill strategic objectives. Various studies provide a window onto the magnitude of the returns:

  • Healthcare has already saved nearly $1 billion through migration from checks to electronic transactions.29
  • There is an average four-minute time saving between electronic processing and checks.30
  • Across industries, the median cost of issuing checks has been calculated at $2.00-$4.00, contrasted with ACH transfer costs of $.25-$.50.31
  • Total administrative savings through multiple automation efforts could attain $1 trillion.32
  • Automated invoicing processes can cost between 40% and 90% less than manual, paper-based methods.33


Payments are a major activity and affect key constituencies. Payment processes must become more cost-effective and convenient to meet urgent market developments. The powerful combination of automated systems and electronic payments — integrated and supported by solid vendor services — anchors effective solutions in refund management, supplier payments and employee wage access. Now is the time to start reaping the benefits of these solutions. 

CommerceHealthcare® solutions are provided by Commerce Bank.


  1. Fitch Ratings, “Labor Pains to Intensify for U.S. NFP Hospitals in 2023,” Non-Rating Action Commentary, December 1, 2022.
  2. Advisory Board, “10 Takeaways from our Cost Management Intensive,” March 17, 2023.
  3. Kaufman Hall, The Essential Role of Financial Reserves in Not-for-Profit Healthcare, April 2023.
  4. Cedar, Healthcare Consumer Experience Study, December 2021.
  5. PYMNTS, “Deep Dive: Giving Healthcare Payments a Real-time Upgrade,” November 20, 2019.
  6. Tegria, “New Data Finds 69% of Americans Would Consider Switching Healthcare Providers for More ‘Appealing’ Services,” February 15, 2022.
  7. Advisory Board, “10 Takeaways.”
  8. American Hospital Association Society for Health Care Strategy & Market Development, Futurescan 2023-2028: Health Care Trends and Implications, 2022.
  9. E. Kowal, “Macro Trends Have Major Impact On Healthcare Finance/AP Teams,” Healthcare Business Today, March 16, 2023.
  10. Aite-Novarica, U.S. Patient Refunds: A Market Sizing, November 27, 2019.
  11. C. Hudson, “Insurance Companies Ramp Up Efforts to Claw Back Money from Providers,” Modern Healthcare, March 20, 2023.
  12. J. Asser, “Revenue Cycle Departments Need Significant Staffing,” HealthLeaders, June 3, 2022.
  13. Olive and Wakefield Research, Internet of Healthcare Report, September 2021.
  14. PINC AI, “Tech-Enabled and Paper Free: Bringing Healthcare Purchasing into the 21st Century,” October 27, 2021.
  15. Kowal, Healthcare Business Today.
  16. Aite-Novarica, Commercial Payment Trends: How Business Payment Methods are Changing, December 6, 2022.
  17. V.Bailey, “Consumers Faced Surprise Medical Bills, Payment Struggles in 2021,” RevCycle Intelligence, March 28, 2022.
  18. Kowal, Healthcare Business Today.
  19. Capgemini, World Payments Report, October 7, 2021.
  20. Market Research Future, Mobile Payment Technologies Market, September 2022.
  21. Market Research Future, Global Digital Payment in Healthcare Market Research Report, September 2022.
  22. Black Book Market Research, “Black Book Announces 2022 Top Client-Rated Financial Solutions Delivering Digital Transformation and Managing Liquidity,” June 4, 2022.
  23. Aite Novarica, Payment Technology Priorities of U.S. Healthcare Providers: Current State and Future State, February 23, 2023.
  24. Mercator, “How Instant Payments Are Taking the Industry by Storm — And Why Businesses Don’t Want to Get Left Behind,” Payments Journal, December 8, 2022.
  25. E. Segal, “Most Workers Want To Be Paid Automatically Every Day According To New Poll,” Forbes, September 13, 2021.
  26. PwC, 2022 PwC Employee Financial Wellness Survey, 2022.
  27. Vision Research Reports, Healthcare API Market Size, Growth, Trends Report 2022-2030, July 2022.
  28. Symplr, From Disparate to Dynamic: Opportunities and Challenges in U.S. Healthcare Operations
  29. CAQH, 2020 CAQH Index, 2021.
  30. Ibid.
  31. Association for Financial Professionals, 2022 AFP Payments Cost Benchmarking Survey, January 2022.
  32. A. Fleron and S. Singhal, “The Gathering Storm: The Uncertain Future of U.S. Healthcare,” McKinsey & Company Insights, September 16, 2022.
  33. A. Bartolini, “ePayables Technology Adoption in 2022,” Payables Place, August 15, 2022.