Taking The Temperature Of B2B Payments In Healthcare

The U.S. healthcare system is a multi-trillion dollar industry, but one rife with inefficiencies, especially when it comes to payments. In an interview with PYMNTS, Todd Harbison, chief revenue officer of Ventanex, an integrated payment solutions provider, contended that the healthcare system itself creates friction between healthcare providers and vendors.

“Unlike traditional B2B areas, where the supplier and customer have agreed upon pricing, and it is the exception when the payment amount does not equal the billed amount, “ he told PYMNTS, “it is standard practice in healthcare for a provider to bill one amount only to have the payer decide to pay a completely different amount.”

That dynamic creates mistrust across the system, he added, and, in many cases, drives providers to choose less efficient payment methods. The technology that can aid in reducing that friction and mistrust — where payments can be reconciled electronically to generate greater operational efficiencies — might be out of reach for many companies, though.

“The reality is that most small and medium providers are unable to ingest electronic remittance advice. Similarly, many payors also have limited generation and distribution capabilities for electronic remittance advice. The net result is people reconciling and posting payments, which negates many of the benefits of faster electronic methods,” he said.

As Harbison noted, that culture of inefficiency is made all the more entrenched by the fact that the medical community, as a whole, is comprised of thousands of small and mid-sized businesses (SMBs) that stick to paper-based means of doing business, especially when it comes to payments.

“That being said, we are seeing increasing adoption rates across electronic payments within the B2B healthcare vertical,” he said.

The Power Of Choice — And Automation

To help remove the frictions that exist within healthcare, payment choice can be a powerful tool in fostering ubiquitous acceptance — across such options as ACH and cards. Allowing suppliers to be paid via the method that they feel provides the most benefits is important, Harbison explained.

However, “in the B2B world, even the fastest and cheapest form of payment is worthless without [automation for] the posting of the payment to a supplier’s system of record,” he told PYMNTS — as seamless payment posting, without unnecessary manual intervention, is of real value.

The Promise Of Open Banking

When asked by PYMNTS as to whether Open Banking might come to the U.S., and what that might mean for B2B healthcare transactions, Harbison responded that there is evidence that at least some applications tied to Open Banking already exist.

“I do expect Open Banking to gain traction,” he said, adding that there already exists the ability for ERP systems to automatically download bank account information to reconcile payments.

In the future, this could be done in real time. He predicted that a significant number of applications for businesses will place an emphasis on companies optimizing their ability to manage cash and debt across multiple financial institutions.

“This will also accelerate the commoditization of many basic banking functions,” he said.

With a nod toward faster payments and its impact on B2B, Harbison said he remains “extremely bullish” on the changes that might come in the wake of such initiatives.

He added that wires are particularly vulnerable to many of the new payment networks and technologies being deployed. Disbursements to consumers — still largely via check — will quickly convert to electronic forms either via ACH, non-traditional networks (PayPal/Venmo), direct to debit or faster payment rails.

“Many of the current proposed systems have limited dollar-amount transactions,” he said of faster payment initiatives, “but that is heading in the right direction to support larger B2B payments.”