Accounts payable automation in action.

Healthcare’s major financial pressures and imperatives have energized efforts to realize cost savings and productivity gains through payments modernization. Accounts payable (AP) is one function targeted for automation to address prevalent manual invoicing, use of paper checks, siloed data and other processes that create complexity and sap efficiency.

This report explores the AP automation opportunity by examining two tools with proven effectiveness and ease of implementation: centralized payment systems and virtual cards to pay suppliers. As a pragmatic guide for decision makers, we offer these details on what each solution offers, critical success factors, and examples of organizational achievement.

Automation’s big target: The numbers.

Administrative transactions abound in healthcare and are increasing in volume. The Council for Affordable Quality Healthcare (CAQH) tracks a range of high-quantity transactions. Its latest data showed volume up 13% in 2024, continuing a steady rise over the past decade (Figure 1).^{[1] footnote [1]} Interestingly, the dental segment contributes significant additional volume and increased 20% last year.

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Figure 1

The cost savings opportunity is sizeable. CAQH estimates that fully automating the administrative processes it monitors could save $18 billion (another $2 billion in dental) by significantly lowering the average manual transaction cost of $7.93. ^{footnote [2]} Invoice processing costs across industries are also elevated. A recent study found the average transaction cost to be $9.40, with best-in-class performers coming in at $2.78, indicative of the savings potential. ^{footnote [3]}

Automation progress made but still work to do.

Healthcare administrative automation is advancing in varying degrees. For example, 77% of claims payments and 80% of claims status communications were fully electronic in 2024, while the figure for attachments was just 32%. ^{footnote [4]} Healthcare’s use of ACH is a bright spot. The second quarter of 2025 saw 138 million healthcare payments, a 9.9% increase over the same period in 2024. ^{footnote [5]}

The progress is encouraging but incomplete. Only 53% of healthcare leaders report having adequate automation of payment workflows. ^{footnote [6]}

Automation’s strategic impact is driving adoption.

The pursuit of automation is intensifying not only because of the demonstrable financial benefits, but also because it supports other crucial healthcare priorities. Among the most significant are the following items:

• Growth investment. At the outset of 2025, 65% of surveyed healthcare executives said that developing revenue growth strategies was a high priority. ^{footnote [7]} The C-suite is looking to multiple sources to fund this growth, including appropriate deployment of working capital. ^{footnote [8]} AP and finance solutions improve control of cash flow and can generate fee revenue, adding flexibility to working capital management.
• Digital transformation. The CommerceHealthcare® Mid-Year Trends Report link opens to a Commerce page noted that 63% of organizations have increased budgets for digital investment, with one-third indicating a rise of over 25%. ^{footnote [9]} AP automation is seen as part of a digital-first commitment and will play a role in artificial intelligence (AI) strategies. Manual processes will prove increasingly incompatible with AI, unable to fulfill the need for complete and structured electronic data.
• Supply chain management. Health systems, hospitals and practices face numerous procurement challenges that may be exacerbated by new tariffs. Strong supplier relations and partnerships are vital in this environment. The payment solutions highlighted in this report foster positive relationships by helping vendors receive their funds more rapidly and in their preferred modes.

AP automation in action: The solutions.

Multiple payables automation solutions have reached proven states of maturity. The options span the AP workflow (Figure 2). This section focuses on two high-value solutions.

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Figure 2

AP payment processing systems.

A centralized invoice automation system is an important linchpin for payments modernization. This software maintains a database of an organization’s suppliers and acts as a hub to consolidate payables into a single file. It then executes the payments, orchestrating them according to each supplier’s chosen mode and automatically generates a reconciliation report (Figure 3). Automation allows staff to move beyond routine, repeatable steps to focus on exceptions and more complex matters.

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Figure 3

This single-payment file approach is foundational. It manages scheduled or one-time payments, processes varied disbursement types (credit card, electronic funds transfer, check), and facilitates revenue share from interchange fees.

What to look for in a solution:

• System integration capabilities. Integrating centralized invoicing to exchange data with core financial systems is important for automation productivity. A solution should support today’s preferred application programming interface (API) model.
• Respect for existing environment. No organization can afford an AP automation solution that significantly disrupts workflow or forces substantial replacements of connected systems. Seek a solution that operates well with the existing IT environment, can be deployed at the organization’s pace of change, and can support multiple banking relationships that may be in place.
• Strong implementation and support. The technology should be supported by experienced people and a disciplined process to speed implementation and help drive user adoption.
• Safety measures. Strong cybersecurity and fraud mitigation features are a key consideration in selecting a solution.

Virtual AP card.

Digital credit cards can be used by buyers to pay suppliers electronically for recurring or single payments. An institution such as Commerce Bank administers the program, loading funds for the invoice amount to the virtual card, communicating the unique card number to the vendor, and completing the transaction through direct payment or automatic deposit into the vendor’s merchant account. Automated reconciliation reports are returned to AP.

Buyers value the control offered by the virtual card since they can set specific dollar amounts, make it valid for only one payment if necessary, and halt payment prior to authorization if an issue arises. Unlike wire transfers, no bank information is divulged in the transaction to bolster security.

The program is launched after a thorough analysis of the buying organization’s spend file to identify all opportunities for vendor participation. The bank will then conduct an initial enrollment campaign and should continue to pursue vendors on an ongoing basis.

This enrollment process is central to maximizing another valuable feature of virtual cards: revenue sharing of transaction fees between the provider and the bank issuing the card. A steady revenue stream enables organizations to transform AP beyond being purely a cost center.

Fast growing option.

Commercial virtual card spend volume across industries has recorded strong growth in recent years. It’s projected to increase at a compound annual rate of nearly 12% through 2027 (Figure 4). ^{footnote [10]} Consumer use is growing as well, powered by e-commerce and other factors. A recent survey found that 65% of consumers expect to use a virtual card within the next 12 months. ^{footnote [11]}

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Figure 4

Clear financial and productivity benefits are powering this expansion. In healthcare, a set of firms analyzed their corporate/virtual card usage and calculated that they were able to pay 30% more of their invoices earlier than in the previous year. ^{footnote [12]} Overall estimates suggest average virtual card processing costs are 15% to 20% less than ACH/EFT. ^{footnote [13]} Additional buyer benefits include greater influence to negotiate better purchasing terms with suppliers through the inducement of faster payments.

What to look for in a solution:

• Targeting of high-potential enrollment candidates. While all provider’s vendors should be evaluated, CommerceHealthcare® experience shows that the “sweet spot” for enrollment is suppliers with annual spend between $10,000 and $1,000,000.
• Diligent enrollment of suppliers. This factor is essential. The key is to engage a bank card sponsor who is proactive and executes consistently. Direct phone calls to vendors have proven to be very effective rather than just relying on email. It’s also imperative that enrollment efforts are maintained over time to secure new suppliers and those who may change preferences.
• The right technology approach. Important virtual card technology features include no software to host at provider sites, no cost for implementation, and ability to work with the organization’s current banking relationships as needed. System integration is likewise important.
• Timely revenue sharing. The organization should receive its revenue share payments monthly or quarterly rather than on half-year or yearly cycles as some card sponsors offer.

Two additional considerations for card programs.

Two other aspects of the virtual card landscape deserve consideration. They create flexibility and significantly enhance program value.

Supplemental virtual card.

Organizations frequently find themselves with a current AP card program that has stalled in terms of supplier growth and rebate revenue. There are a number of reasons for slow growth, including the following:

• Lackluster enrollment effort.
• Enrollment spend floor requirements that exclude a significant number of vendors.
• Lack of payment options for vendors who initially resist virtual card adoption.

As subsequent examples in this report will substantiate, a program refresh using a new secondary card from another sponsor can reinvigorate a program and jump start expansion. The new sponsor can bring the strong enrollment initiative required. Moreover, CommerceHealthcare® has encountered several cases in which some of the provider’s suppliers are already using a virtual card with another of the bank’s clients, suggesting likelihood to enroll.

Alternative payment options.

Offering a portfolio of payments options satisfies different vendor needs while preserving electronic processing and revenue share potential for the organization. The track record of CommerceHealthcare® clients validates several effective virtual card alternatives or variations:

• Closed loop networks establish a private payment link between bank and supplier at a negotiated interchange rate. Suppliers gain by receiving a reduced rate as compared to their existing merchant agreement.
• Straight-through virtual card processing involves the buyer generating payments through a virtual card and the bank depositing the funds directly into the supplier’s merchant bank account.
• Proxy payments use an alternative indicator to bank information for the supplier’s account. The intermediary bank matches the proxy to the actual supplier account and transfers funds electronically. Security and regulatory compliance are maintained and a processing fee can be shared with the buyer.

AP automation in action: Provider stories.

Highlights from several CommerceHealthcare® client stories help illustrate the practical deployment and resulting benefits of these automation solutions.

Virtual card.

• Benco Dental link opens to a Commerce page regarded its primary card provider as having had a “one size fits all” approach that eventually led to a stagnant program. The company added a virtual card and tasked the bank with soliciting suppliers who had declined usage. Exceeding expectations, the bank enrolled over one hundred of them within six months. Diligent outreach created continued growth not only for the card, but for other electronic payment modes as well.
• Legacy Health link opens to a Commerce page experienced similar underperformance from its incumbent card sponsor. CommerceHealthcare® proposed a 90-day initiative to approach Legacy’s many vendors still receiving paper checks. As a measure of its commitment, the bank offered to pay Legacy the projected new revenue share within the initial period. The initiative nearly doubled the dollar volume of invoices paid by virtual card. Ongoing enrollment grew the virtual card over time and put many non-card payees on ACH. Legacy established CommerceHealthcare® as its primary card.
• Mary Washington Healthcare link opens to a Commerce page is another organization that faced problems with its initial card supplier. The health system felt it was expected to shoulder much of the work to enroll vendors. CommerceHealthcare® was engaged as a supplemental card provider. It canvassed all non-enrolled vendors and managed the end-to-end card process. The diligence paid off in virtual card growth and in regular production of a vendor list detailing each supplier’s preferred payment method. Mary Washington adopted the bank’s card as its primary.
• American Healthcare’s link opens to a Commerce page CFO stresses the critical importance of consistent, effective enrollment to realizing growth potential. “We found immense value with the ongoing supplier enrollment. It continues to augment our revenue share payments.”

AP Payment Hub.

• Gundersen Health System link opens to a Commerce page felt burdened by time-consuming manual processes for its check and ACH payments, and its existing virtual card bank partner had no vendor enrollment initiatives. CommerceHealthcare® went live with its automation solution in eight weeks. A single instruction file now initiates payment processing, whether ACH, card, or check, and the system maintains all vendor information. Within the first year, 60,000 invoices were managed through the program.

Results summary.

The range of positive results that AP Automation can generate can be seen in the highlights listed in Figure 5.

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Figure 5

Conclusion.

Meaningful opportunities exist to automate key processes in AP as well as generate new revenue pathways. Solutions such as centralized invoicing systems and virtual cards represent the most immediate possibilities. The actionable examples in this report document the success available in attaining AP efficiencies, cost savings and support for broader financial technology initiatives.

CommerceHealthcare® solutions are provided by Commerce Bank.

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