No Substitute for Experience

Past Helps Industry Veteran Solve CMN Woes

EXPERIENCE IS AN invaluable resource, especially when starting a new business. Fortunately for Rick Wren, president and co-owner of Middletown, Ohio-based Wren Care, he had many years to draw on when he started his company.

Formerly a regional vice president for Costa Mesa, Calif.-based Apria Healthcare, Wren has a 23-year track record in the home medical equipment industry that includes sitting on the board and serving as current president of the Ohio Association for Medical Equipment Services. In August 1999, he started his own HME company, tapping into the many contacts and vast knowledge he had accumulated over the years.

"My experience has given me a lot of insight on what to do and what not to do, how to be successful and how to buy and sell equipment properly," says Wren, adding that he has kept up with national and state issues through his state association involvement.

That background also has taught him how to deal with one of the most irksome features of the HME business: certificates of medical necessity.

"With OAMES, we put out questionnaires to companies about what is the most difficult part of this business," says Wren. Hands down, he said, the most common answer was "getting the prescriptions and CMNs back from physicians, filled out properly, so you can actually do your billing and submit your bills to get paid." He says he heard the same complaint from branch managers when he was at Apria.

To tackle this problem, Wren Care hired a full-time specialist to manage its entire CMN process. The specialist tracks each CMN from beginning to end, ensuring the physician filled it out correctly and following up when it has not been returned.

This specialist's responsibilities include preparing the prescriptions, sending them to the doctor's offices, tracking them when they come back, and reviewing them in detail. The specialist also documents what stages the CMNs are in, such as whether they have been prepared, when they have gone out, how they were delivered, when they came back, whether they were correct, and whether a follow-up call to the physician was necessary.

Wren knew hiring a specialist would be a financial risk. The new business was just starting to make a little profit. He wondered if it would be wise to "dump the money back in and invest in a person to focus on CMNs. "But we took the stance that it was necessary to do that," says Wren.

And the company has already reaped the benefits from that decision. For example, its rate of accurate prescriptions coming back is about 80 percent, an increase from less than 50 percent before the CMN specialist was hired. In addition, the company's number of days sales outstanding has dropped 15 days to 80 days, and Wren expects the DSO to continue to drop further to 70 days.

"This position has paid off in dividends with better cash flow and only a few held claims today," says Wren. "And that process is getting better by the day. In addition, it has sped up our internal operations and is making life easier for everyone."

That adds up to a good experience for everyone.