How a Large Healthcare Provider Increased Speed and Accuracy with ServiceNow APO
Automation & Insights Helps Them Protect $20M in Annual Operating Margin
A large nonprofit healthcare provider in the Southwest manages $2.5B in annual revenue across nine acute-care hospitals and 200+ outpatient locations.
With approximately $800M in influenceable spend—clinical supplies, pharmaceuticals, equipment, facilities, and contracted services—the organization operates on ~2% operating margins.
With those margins, every $100K in preventable invoice overpayments directly reduces capacity to sustain staffing, refresh equipment, or expand services.
The constraint wasn’t revenue. It was margin leakage. One of the key suspects was Accounts Payable Operations—the function responsible for validating, approving, and paying supplier invoices enterprise-wide.
The Challenge: AP Friction Erodes Financial Viability
The AP organization faced a compounding set of challenges that quietly eroded margin:
Fragmented invoice intake created visibility gaps
Invoices arrived via email, supplier portals, and manual uploads with no centralized tracking. AP discovered invoices only when suppliers called asking about payment status—sometimes weeks after submission.
Manual matching across disconnected systems
Staff spent 15-20 minutes per invoice hopping between systems to validate PO and receipt data. What should have been automated & exception-based consumed significant productive capacity.
Duplicate payment exposure
Invoices could arrive via email, fax, and portal – and created the possibility for variations—which resulted in $400K+ in annual duplicate payments that required manual recovery of funds that should have never been paid.
Exception aging without bottleneck visibility
Exceptions sat in queues with no aging metrics or root-cause analysis until manually reviewed, resulting in missed early-payment discounts worth $200K+ annually and, sometimes, penalty fees.
Contract price drift going undetected
Supplier price drift accumulates silently: surgery center invoices medical supplies at $247/unit, while the GPO contract specifies $229—but AP only has manual visibility into the negotiated rates buried in purchasing agreements. Each transaction pays 8% over contract, compounding across thousands of line items.
None of these issues alone threatened the organization. Together, at scale, they eroded $8-12M in operating margin annually.
AP teams worked hard, but fragmentation forced them into a reactive posture—discovering problems late, resolving them manually, and often writing them off as the cost of doing business.
Leadership recognized a fundamental truth:
You can’t enforce financial discipline at scale without end-to-end connectivity.
Step 1 — Establishing Control with ServiceNow Accounts Payable Operations
They began their transformation by implementing ServiceNow Accounts Payable Operations (APO) as the foundation for AP automation and orchestration.
ServiceNow APO consolidated invoice ingestion, matching, approvals, exception handling, and supplier visibility into a single system of action, eliminating blind spots and manual handoffs across the AP lifecycle.
What Changed with ServiceNow APO
Centralized invoice intake across email, portals, and integrations
Automated two- and three-way matching against purchase orders and receipts
Structured exception workflows with ownership, prioritization, and aging
Improved transparency into invoice and payment status, reducing supplier inquiries
For the first time, AP leadership had enterprise-wide visibility into what was happening, what was blocked, for how long, and why.
Measured Outcomes (Step 1)
- 25+% reduction in invoice touches → freed 3,000+ AP hours annually for contract compliance auditing and supplier performance analysis
- 25+% faster receipt-to-approval cycles → improved early-payment discount capture from 12% to 67%, generating $280K in additional cash flow
- 95%+ duplicate invoice detection → prevented $450K in duplicate payments annually, eliminating manual recovery efforts
- 16+% reduction in overall AP workload → enabled redeployment of staff to higher-value activities
More importantly, AP leadership gained enterprise-wide visibility into what was waiting, what was blocked, and why—enabling data-driven staffing decisions and, for the first time, bottleneck elimination.
ServiceNow APO delivered immediate gains in speed, consistency, and control.
But exceptions still consumed 60% of AP staff time—analysts spent 15-20 minutes per invoice determining why prices didn’t match, not just that they didn’t match.
The bottleneck had shifted from intake to investigation. Volume was manageable. Complexity was not.
That limitation defined the next phase.
Step 2 — Accelerating Accuracy for Accounts Payable
With ServiceNow APO firmly in place, the provider introduced Now Assist for AP to reduce the effort required to review and resolve invoice exceptions.
Now Assist for AP uses generative AI to support AP specialists directly within APO workflows by interpreting invoice data, summarizing exceptions, assisting with line-level mapping, and suggesting next actions based on context and historical patterns.
How Now Assist for AP Changed Daily Work
AI-assisted invoice line-to-purchase order line mapping
Automatic exception summaries, eliminating time spent gathering context
Suggested resolutions based on prior invoice and supplier behavior
Faster identification of pricing, quantity, and receipt discrepancies
Instead of replacing human judgment, AI augmented it—allowing AP specialists to focus on meaningful exceptions rather than repetitive analysis.
Measured Outcomes (Step 2)
- 50–60% reduction in invoice touches → accurate touchless processing achieved for standard invoices
- 40–50% reduction in manual AP effort → eliminated 6,000+ hours of manual investigation annually
- 60% faster exception resolution cycles → reduced average resolution time from 6-8 days to 2-3 days
- 85% accuracy in price variance detection → flagged unauthorized price increases totaling $2.3M annually
AP shifted from transactional processing to exception management by design. Throughput improved, backlog shrank, and staff productivity increased—without adding headcount.
But the largest source of margin leakage remained invisible: contracts.
Negotiated supplier economics—volume discounts, escalation caps, SLA penalties, rebate terms—lived in documents, not in AP workflows. Sourcing teams won better pricing. Finance approved contracts. But AP had no mechanism to enforce terms at invoice time.
The result: negotiated value was routinely lost after contracts were signed.
Step 3 — Protecting Margin with Now Assist for Contract Intelligence
Healthcare providers manage highly complex commercial terms across clinical, pharmaceutical, and services spend, including:
- GPO pass-through pricing with tiered rebates and compliance thresholds
- Physician preference item cost caps that vary by surgeon and procedure type
- Pharmaceutical chargeback agreements requiring manufacturer reconciliation
- Service contract SLA credits for EVS, food service, linen, and clinical equipment maintenance
- Implant consignment billing with complex usage-based invoicing
Historically, these terms lived in documents—not in AP workflows. As a result, negotiated value was frequently lost after contracts were signed.
Now Assist for Contract Intelligence enabled the provider to:
Interpret contract language using AI
Validate invoice pricing against active contract terms
Identify unauthorized surcharges and out-of-policy fees
Surface missed rebates and SLA credits before payment
Measured Outcomes (Step 3)
- 90%+ contract price and term validation rates → eliminated $5M+ in annual contract price drift
- 90% capture of eligible rebates and SLA credits → recovers $2M+ in incremental unclaimed value
- Closure of 1.5% invoice-level leakage → protected $12M+ in operating margin across $600M influenceable spend base
- Additional 7+% reduction in downstream AP workload → freed staff from manual contract lookups
For a healthcare provider operating on 2-3% margins, this represented the difference between investing in clinical innovation and absorbing cost overruns.
The Combined Impact: Compound Value Creation
By sequencing the transformation correctly, the provider achieved compounding benefits that exceeded the sum of individual phases:
Contract enforcement (Step 3) only worked because AI validation (Step 2) had already reduced exception volume by 50%—freeing AP staff to focus on high-value contract compliance rather than transactional firefighting.
AI-assisted exception resolution (Step 2) only scaled because ServiceNow APO (Step 1) had centralized intake and established data quality standards.
Financial outcomes totaled $20M in annual margin protection—representing an 8x return on the three-year transformation investment.
Most importantly, the AP organization no longer had to choose between speed and accuracy.
Automation delivered both.
Strategic Takeaway for Healthcare Provider CFOs
This case highlights a critical lesson:
Accounts Payable is not a back-office function. It is a margin protection control.
ServiceNow Accounts Payable Operations establishes visibility and discipline.
Now Assist for AP accelerates productivity and accuracy
Now Assist for Contract Intelligence ensures negotiated value is realized
Together, they transform AP from a reactive cost center into a systematic enforcer of financial integrity—protecting margin that funds staffing stability, equipment investment, and service expansion.
Closing Thought
Healthcare providers do not improve financial performance by cutting corners. They improve it by eliminating waste, enforcing discipline, and scaling accuracy.
The choice is clear: close the AP leakage gap now and free margin for strategic investment in clinical services, technology infrastructure, and staff development—or continue absorbing preventable losses that constrain your ability to serve patients and compete effectively.
For organizations already running ServiceNow, the opportunity isn’t replacement—it’s completion.
ServiceNow provides the platform. AI provides the intelligence. The execution layer that turns automation into margin protection is what transforms potential into performance.
