Northwestern Medicine and FNBO: Transforming Payments for Operational Efficiencies

Northwestern Medicine and FNBO: Transforming Payments for Operational Efficiencies

Northwestern Medicine, an integrated academic health center and healthcare system in the greater Chicago area, recognized the need to digitize and automate its accounts payable and treasury processes. It needed partners that could facilitate the complex operational changes and turned to FNBO and GHX.

This article, which is based on topics shared in a workshop titled "How to Transform Accounts Payable into a Profit Center" at the HFMA 2024 Annual Conference, looks at how this collaboration contributed to remarkable success in Northwestern's reimagined procure-to-pay (P2P) process. The initiative helped reduce costs, enhance working capital and ultimately support enterprise-level resilience.

Northwestern Medicine’s Automation Goals

Today’s changing healthcare landscape—characterized by workforce shortages, supply chain disruptions and shrinking profit margins—prompted Northwestern Medicine to reevaluate its payment processes.

However, implementing a comprehensive P2P overhaul is no small feat, especially for an organization operating 13 hospitals and over 200 locations. Northwestern Medicine needed a holistic, enterprise-wide strategy that would standardize digital processes across supply chains, accounts payable, and finance and treasury departments, while also considering the needs of key suppliers.

Amy Platis, Director of Finance for Northwestern Medicine, said the guiding principles of her organization are: Will an initiative lower operating costs or will it generate revenue? So process efficiencies, reduced costs, revenue opportunities and cash management were key goals driving the organization’s strategic approach.

FNBO: A Trusted Consultant for Payment Transformation

Northwestern Medicine required more than a traditional bank to succeed in its digitization journey. It needed a consultant with deep industry expertise, which it found in FNBO. The healthcare organization also found the ideal payables partner in GHX.

FNBO's approach centers on an "uncommon understanding" of its customers, explained Blake Sorrell, Director of Healthcare Banking at FNBO. The healthcare industry's cash conversion cycle is unique, and FNBO's comprehensive knowledge of the sector's challenges enables it to propose tailored solutions for achieving savings and revenue goals through technology adoption.

FNBO focuses on fostering strong relationships, facilitating open communication and addressing four key areas:

• Truly understanding customers and their goals.
• Identifying challenges, including those the customer may not recognize, but that FNBO may see from a banking perspective.
• Providing customized solutions to help customers overcome challenges and achieve their goals.
• Remaining nimble and constantly evolving to identify new ways to enhance efficiency and support success.

GHX helps healthcare providers increase operational efficiency and drive down costs of doing business. GHX and the bank created the FNBO GHX ePay platform, which includes many of the largest medical supply vendors. The ePay platform uses two payment rails, Virtual Credit Card and expedited ACH.  Both forms of payment help vendors to receive funds more rapidly while also giving providers a rebate, creating the added bonus of a new revenue stream for participating healthcare systems.

Northwestern Medicine started with expedited ACH only on FNBO GHX ePay, then layered in a virtual card program. This gradual progression ensured a smooth transition and created a foundation for success.

Results of the Northwestern Medicine, GHX and FNBO Collaboration

The synergistic collaboration between FNBO, GHX and Northwestern Medicine led to significant improvements, Platis said. The solution digitized payments and helped streamline remittance for suppliers. It also reduced the cost of check stock, stock payment, reissues and labor and developed a revenue stream through rebates.

Fraud risk was reduced by shifting from paper-based checks to electronic payment methods, and FNBO's secure payment connection protects sensitive data. In addition, GHX stores all vendor banking information, eliminating the need for Northwestern Medicine to do so and increasing supplier confidence in secure payment handling.

Supplier relationships were strengthened in other ways, too, Platis said. Northwestern Medicine worked with its supplier network to migrate to new payment solutions. Ongoing conversations led to strategic collaboration, rather than change being forced on suppliers. This ensured both sides were aligned and aware of the benefits offered by digital processes, including streamlined transactions, faster payments, comprehensive data reconciliation and quick dispute resolution.

Automation also allowed the healthcare system to decrease the number of full-time employees and manual data entry. Platis’ team manages about 1.5 million transactions a year and the goal is to touch as few as possible. Invoice digitization allowed the team to increase its straight-through processing rate from about 30% to 80%. The 20% stopped are exceptions that need to be worked on with suppliers.

The changes lowered check-related costs and reduced customer inquiries by 65%, according to Platis. Those savings—along with rebates from FNBO GXH ePay—helps the organization to transition accounts payable from a cost center to a profit center.

The success of Northwestern Medicine's collaboration with FNBO and GHX in digitizing payments and streamlining the P2P process demonstrates the transformative power of automation in healthcare finance. The initiative helped reduce costs, improve working capital, enhance supplier relationships and free up resources to prioritize patient care—aligning with the health system’s core mission.

In an ever-evolving healthcare landscape, Northwestern Medicine's commitment to innovation and efficiency has positioned the organization for continued growth and success. The collaboration between Northwestern, FNBO and GHX exemplifies how collaboration and adaptability can drive positive outcomes in healthcare finance.

Acknowledgements

"How to Transform Accounts payable into a Profit Center" at the HFMA 2024 Annual Conference.