Hap-X Healthcare exchange – a working capital solution for Healthcare

Total health expenditure is huge. In 2012, health-care spending was $2.8 trillion in the United States. If you have ever dealt with billing, payables etc. you know it’s not the strong point of hospitals. Most hospitals do not have a lot of cash on hand. In fact many hold on to bills as long as possible and pay as many as they can with a corporate pcard to get rebate income. If a hospital analyzed their spend, it probably follows the old 80/20 rule – where 80 percent are with the largest suppliers.   Most of these large suppliers would probably not want to take pcard in lieu of paper checks and pay expensive "interchange fees" that credit card companies impose.

Hap-X saw an opportunity to service the healthcare sector with an electronic payment system that serves the same function of the P-card without going through the card networks. It now serves more than 100 hospitals in 32 multi-hospital systems across the country. The developers of H-Card devoted most of their careers to serving the healthcare industry. In 2010, Hap-X - Healthcare's Automated Payment Exchange was formed and the solution uses banking arrangements to provide a procure-to-pay settlement solution between provider and supplier customers.

Developing a private healthcare exchange enables Hap-X to:

  • Eliminate credit card companies from the mix
  • Charge vendors less because you do not have the interchange fee that traditional P-cards charge (to compensate both the cardholder bank for extending credit and the merchant bank for accepting the card). The vendor might pay a 1 percent discount off invoice value versus a 2 to 3% with pcards.
  • Give vendors their money faster. Vendors may settle with a credit card or with a formatted ACH payment for the increasing numbers of suppliers which do not accept credit cards.
  • Help hospital's with working capital by both extending DPO and providing rebate income

From a technology perspective, there is little integration work on behalf of a hospital. They send a secure file transfer of their approved invoices to Hap-X, where the file is cross-checked, validated, approved and processed with relevant remittance data – via the ‘best value’ payment mode selected by the client.

Other exchanges in this space include Bottomline Technologie's PayMode solution.

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