Unapplied Payments

SUNY Downstate Medical Center in Brooklyn is one of the nation’s leading urban medical centers and a major training ground for physicians.

Like many academic medical centers, it operates as a federation of independent billing entities under a single tax identification number. When patients receive services across multiple departments — such as emergency, radiology and labor & delivery — insurers send a single check for all services. Historically those payments were photocopied, manually split among vendors, and reconciled over months.

New York’s insurers recently shortened the window for posting these payments, putting roughly US $4 million per year of hospital revenue at risk.

Business Automation Experts (BAE) partnered with SUNY Downstate to modernize the process. By digitizing payment documentation, automating allocation and reconciliation, and training vendors to use a unified workflow, BAE cut the turnaround time from 120 days to approximately 24 hours, captured lost revenue, reduced administrative costs and created an audit‑compliant, scalable solution.

Project Overview

Client Context

SUNY Downstate serves over 2.3 million people in the New York City area. The hospital’s billing is fractured across eight separate entities: emergency, radiology, labor and delivery, as well as other specialist groups, each with its own billing vendor but sharing a single tax ID. Payment cycles were previously slow and labor‑intensive. Insurance companies aggregated multiple claims into a single check accompanied by an explanation of benefits (EOB). Each vendor would copy the check and EOB, post its portion of the payment and forward physical copies to the hospital’s finance team. The finance team then copied and mailed the documents to the remaining vendors for posting. This manual process not only delayed revenue recognition but created a large balance of unapplied payments – monies received but not yet matched to specific claims.

Business Challenge

SUNY Downstate faced four interrelated challenges:

1. Multi‑department reconciliation – with eight billing entities invoicing under one tax ID, insurers issued a single payment that needed to be subdivided manually among departments. Paper invoices and check stubs travelled through multiple offices, causing delays and errors.

2. Regulatory risk and clawbacks – New York insurers tightened rules around unapplied payments. Any payment not reconciled within 90 days could be clawed back, jeopardising roughly US $300–400k per month for the hospital.

3. Manual, paper‑heavy workflows – billing staff photocopied checks and EOBs, entered data in disparate systems and sent physical packages via FedEx. The process routinely took four months to reconcile payments, tying up staff time and delaying revenue recognition.

4. Lack of auditability – without a centralised system, finance teams lacked a clear view of who received which payment and when. Disparate Excel trackers and email threads made audits time‑consuming and error‑prone.

Solution

BAE worked closely with the hospital’s billing vendors and finance team to replace manual processes with a scalable, digital workflow built on Laserfiche. Key components of the solution included:

1. Centralized Digital Repository and OCR

• System upgrade and configuration – BAE updated SUNY Downstate’s on‑premises Laserfiche environment to the latest supported version and configured secure user roles. The old system lacked support, so BAE coordinated with Laserfiche’s Alabama‑based reseller to perform a seamless upgrade.

• Document capture and indexing – vendors now upload EOBs and checks directly into Laserfiche as PDFs instead of printing and mailing copies. Laserfiche’s optical character recognition (OCR) reads the patient ID, claim numbers and payment amounts. BAE designed metadata fields and templates so payments are automatically associated with the correct patient and department. Staff can locate a document by typing an ID into the search bar, regardless of minor OCR errors.

2. Automated Allocation Workflow

• Stamp‑based claiming – within Laserfiche, each vendor claims its portion of a payment using digital stamps. The user opens the scanned EOB, applies a departmental stamp to the relevant lines and enters the amount allocated. BAE built a behind‑the‑scenes calculation engine that sums all departmental claims per payment.

• Concurrent vendor posting – as soon as the payment arrives in Laserfiche, all vendors can access the same document and claim their portion, eliminating the sequential photocopying and mailing process. Vendors no longer see each other’s allocations, ensuring privacy while enabling simultaneous posting.

3. Automated Reconciliation and Finance Reporting

• Real‑time reconciliation – Laserfiche workflows automatically tally vendor claims. When the total claimed amount equals the payment amount, the workflow marks the payment as fully applied. If a discrepancy exists, the finance team is alerted to investigate.

• Dashboard and audit trail – the finance department uses Laserfiche’s dashboards to monitor unapplied payment balances and aging. Each claim stamp and edit is timestamped, creating a full audit trail for compliance and inquiries. Finance staff can produce reports showing total receipts, unapplied balances and time to resolution.

4. Change Management and Training

BAE worked with University Physicians Brooklyn (UPB), a SUNY Downstate affiliate responsible for improving financial efficiency. BAE trained each vendor on the new process, from uploading documents to stamping and posting payments. By eliminating paperwork, vendors could focus on billing accuracy rather than logistics. BAE also provided documentation and knowledge transfer so internal teams could administer the system long‑term.

Results

• Dramatically reduced cycle time – the new workflow cut the payment allocation process from approximately 120 days to 24 hours. Vendors post payments immediately upon receipt, and finance staff reconcile unapplied balances daily.

• Revenue preservation – by meeting the 90‑day reconciliation requirement, SUNY Downstate avoided insurer clawbacks estimated at US $4 million per year. Previously, unapplied balances of US $300–400k per month risked being forfeited if not cleared.

• Lower administrative costs – the digital process eliminated photocopying, FedEx shipping and manual data entry. Staff formerly assigned to managing paper can now focus on higher‑value tasks.

• Improved audit compliance – Laserfiche’s audit trail provides clear evidence of when each payment was received, who applied it and how funds were allocated. Finance staff can produce reports for internal and external auditors within minutes.

• Scalability and replicability – the solution is reusable across other departments and hospitals facing similar multi‑vendor billing challenges. UPB subsequently engaged BAE on a delegated spreadsheets project, demonstrating confidence in the methodology.

Final Impact & Value Delivered

Business Automation Experts helped SUNY Downstate transform a high‑risk, paper‑bound process into a streamlined, digital revenue cycle. By integrating OCR‑enabled document capture, stamp‑based allocation, automated reconciliation and real‑time reporting, BAE ensured that payments are applied quickly and accurately, preserving millions of dollars in revenue. The hospital has gained transparency, audit readiness and a process that can expand as services evolve. Crucially, the project demonstrates how targeted automation and change management can turn cumbersome billing processes into digital solutions that improve speed, capture lost revenue, reduce costs and remain audit‑compliant.

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