If your home medical equipment company is running smoothly, beware. The resulting complacency could undermine your long-term success. The changing industry landscape is making most HME providers anything but complacent as they struggle to survive competitive bidding and other external challenges to profitability. More likely, providers are desperate to change their business, to make it more efficient, to find new product categories. New automation and business analytics tools are helping providers streamline their operations, identify new opportunities and reinvent their companies to survive—and maybe even thrive—in the new healthcare climate. “It all comes down to visibility into the business,” says Gregg Timmons, president and CEO of MedAct Software, which supplies an analytics tool that can direct an HME provider on a successful path. “You have to have visibility into the working processes in order to manage them, and technology provides that visibility.”
Building Processes Around Caregivers
When addressing technology needs, a company’s processes and culture have to change, says Brad Heath, vice president of operations and marketing at Family Medical Supply in Dunn, N.C., which provides a full range of HME products in 15 locations throughout central and eastern North Carolina. Family Medical Supply depends heavily on flow charts that map the old way of doing things and contrasts it with new processes. “We have an entire industry built by caregivers, not by businesspeople,” says Heath. “The solution isn’t to change the caregivers into businesspeople, but to build processes around people to allow them to be more efficient as caregivers.”
Heath uses the Brightree cloud-based billing and management software platform to track the business. Software and automation have brought transparency to every part of the business. “It’s not just transparency; the software puts a magnifying glass on every part of the company to enable better decision-making, more detailed tracking,” he says. “It looks at how to quantify where we put our resources and how to get the greatest return on human capital.” Heath says HME/DMEs that are analyzing their business narrowly based on accounts receivable should instead look at the broader picture.
Family Medical Supply has been a Brightree customer since 2006. Over the years the provider has embraced new elements of the platform and now uses Brightree for “everything,” says Heath. That includes inventory management, tracking sales orders, posting every patient note, point of delivery systems, the electronic fax system and the interactive voice response (IVR) phone system. In 2006, Family Medical Supply operated 12 stores. Today the chain has grown to 15 stores, but uses fewer billers than it did then, and it has 35 percent less days sales outstanding (DSO). The HME uses Brightree’s cloud database to benchmark company operations against trends of other Brightree customers and against its own historic data. “I look at where we’re growing, where we’re not growing, how much accounts receivable (AR) we have held, how many new patients we added, whether we are hitting our targets,” says Heath. “The best thing information does is raise more questions. It allows us to analyze what’s working and what’s not working. It leads you to the place where you’re asking questions and measuring results.”
Dave Cormack, Brightree president and CEO, says the company promotes its role as a business partner of customers, not just a software vendor. “It’s important to choose a partner that will be in it for the long-term,” he says. “The most important thing is to understand how the business runs, the product lines, the branches and their focus, to analyze the core of what they’re doing.” Brightree customers routinely reduce operations costs and collection times by 20 to 25 percent, he says. Automation enables labor savings. The platform addresses every business process from order input to payment posting. Features also include auto-payment posting, which automatically matches incoming payments to outstanding balances, and Document-Aware, which confirms the existence of scanned documents before billing. Brightree’s Patient Connect IVR platform automates the process of contacting patients and can increase consumable sales by 38 percent.
The Brightree system has also helped Family Medical Supply deal with competitive bidding. Heath uses analytics to look at activity-based costing to determine how well the company can perform at the rock-bottom Round 2 pricing. “The truth is that we want to continue to serve our current relationships at these numbers, but growth in our business will have to come in other areas,” says Heath. Brightree data also helps Family Medical Supply analyze any correlation of product groups. For example, to what extent might a customer in a competitive bid category also represent potential additional business in a related product category with a better profit margin?
Brightree’s cloud-based system uses commercial data centers to store customer data, with backup and recovery systems located 500 miles away at another data center. The company plans to spend $75 million in product development in the next four years and uses the newer Microsoft .NET platform. The supplier has already put competitive bid price tables in place across the country. Cormack says that in the future, cloud-based systems, which collect data on the Internet, could potentially increase the transparency between acute care facilities and DMEs, especially as the focus shifts toward providers sharing data and demonstrating better outcomes.
Brightree’s customizable reporting and business analytics tools enable providers to oversee all aspects of their business—billing, DSO, inventory, marketing/sales, cash, AR, etc. “What gets measured gets done,” says Cormack. “You don’t get what you expect, you get what you inspect.” An available library of 70 standard reports can be run in real-time, and a customized report writer lets the provider create any report necessary. The Business Scorecard analyzes nine key performance indicators, measuring against targets, and the Executive Dashboard allows historical data to be viewed graphically. BrightCFO intelligently forecasts 30-, 60- and 90-day cash projections by payer group, product group, sales versus rentals, etc. The Product Profitability Analyzer tool allows profitability to be determined at various reimbursement rates. Brightree customers can benchmark to the aggregated data of other Brightree customers, and soon the data can be filtered based on geographic location, product line, payment type, etc., to target benchmarking to peers in similar circumstances. “For me, the cup is half full,” says Cormack. “For providers that get the automation right and run their business on key indicators, there is a big marketplace that will survive.”
“HME is a labor-intensive service industry, where the greatest costs are labor, and you get to a point where you can’t cut anymore,” says Heath. “We are not prepared to treat patients from a kiosk, so we have to protect patient services by using software to help channel resources.”
Predictive Analytics and Productivity Assessments
Kevin Milam, owner of The Billing Center, Charleston, W.Va., has worked in HME/DME billing for 29 years, first for a small, independent provider and now as a contractor with 35 employees that handles billing for dozens of HME/DMEs located in several states. The Billing Center works closely with its provider customers to understand their business on the operations side, and to educate them on how operations impact billing.
With industry changes putting pressure on Milam’s clients, he has embraced a consultancy role to help his customers adapt to changes in the business. He uses MedAct Business Manager, a data aggregation, predictive analytics and data visualization platform, to provide data to then highlight a path to success.
Milam says two-thirds of his clients are involved in Round 2 competitive bidding. He uses the MedAct Business Manager system to analyze and predict the impact of pricing and other variables as his client providers consider how their business should evolve in the changing climate. The Business Manager platform leverages predictive analytics to aggregate data from multiple sources to deliver a 360-degree view of business operations.
For example, should a company “grandfather” existing customers or not? What is the impact on business in either scenario? The system enables analysis of various business categories. Do we want to keep this or get rid of that? What would happen if we did this? Analyzing the scenarios using the MedAct Business Manager software helps to guide critical decisions for The Billing Center’s customers.
Milam’s customers are also looking at how they might grow their business, such as expanding into hospice care or pediatrics. In supplying hospice care, providers avoid the impact of competitive bidding but also face thin margins. The analytics software can help them judge the economic viability of supplying a hospice while taking into account variables. Similar analysis can also guide decisions of whether to enter other markets such as pediatrics or urology.
MedAct Business Manager analyzes multiple variables that impact a client company’s economic well-being. Analytics can view denial rate, total growth, dollar-per-claim and other numbers. Milam can compare metrics of one client customer with aggregate numbers from his entire client base or specifically against a similarly situated client. Some locations have higher denial rates, while others have slower billing processes. What are the dependencies between the two (i.e., do slower billing processes suggest greater care that pays off in fewer denials)? “These metrics can support discussions of how a customer can maximize productivity,” says Milam. Identifying a common cause of many denials guides process changes to improve future outcomes.
The user interface of the MedAct system allows operators to move easily and dynamically from customer intake, to customer files, to inventory. The system employs intelligent features to ensure, for example, whether all the needed information is provided before a claim is submitted. The Billing Center uses MedAct for billing for all its customers, regardless of the operations system each customer uses.
The MedAct Business Manager platform aggregates data both from a company’s Quickbooks financial database and the MedAct system to create a 360-degree snapshot of the business. Analytics functionality allows customers to predict and forecast future business trends, taking into account factors such as seasonality and other aspects of the company’s history. A scenario-based planner allows users to adjust variables such as HCPCS codes, unit sales, allowables, percentage volume, etc. Each scenario, including 36 months of forecasts, can be saved and compared to other combinations of data. Data visualization functionality allows various factors to be correlated and displayed to support management decisions.
Collecting Payments from Patients
Several factors are converging to make billing and collections a higher priority in the HME/DME community moving forward, and an automation solution can address the changing need. Lower reimbursement rates mean higher deductibles and copays for customers. The Affordable Care Act’s intended expansion of the number of people covered by insurance suggests more patients will be consuming more healthcare resources over time, translating into even more billing transactions. Even competitive bidding, which is expected to decrease the number of DME/HME providers, will likely increase the number of customers each surviving provider will serve—after all, the customers aren’t going away.
As prompt payment becomes more and more important, A/R Allegiance Group offers new, automated processes to increase payments, optimize collections and, in effect, ensure that the provider makes money. A/R Allegiance Group is a technology-based billing and collection company that has automated the entire continuum of billing and collections, from when the first bill is sent until payment is received. The automated system can manage an increase in billing to healthcare consumers as both their numbers and their share of expenses increase. For providers squeezed by lower reimbursements, customer billings likely represent most if not all of a provider’s overall profit margin. When reimbursements were flush and co-payments small—sometimes even waived—billing played a less critical role. The lower priority of billing to customers at the time was reflected in the low-tech practice of sending a monthly bill asking for payment. Today a better, automated system is needed.
One A/R Allegiance customer, ATG Rehab, Rocky Hill, Conn., realized an 81 percent recovery rate on patient balances using A/R Allegiance’s COLLECTPlus system. The system provides performance reporting to support the improved recovery rate and enables ATG Rehab to adjust processes for faster payment. The A/R Allegiance system has also provided labor cost savings. “Our DSO as a company has dramatically improved,” says Jenny Fry, ATG Rehab’s vice president of reimbursement.
Automation allows A/R Allegiance customers to “touch” the patient in multiple ways using various technologies with almost no cost (and no labor). One factor that helps encourage payment is an invoicing system is easier for patients to understand, and more closely matches the information in the EOB the patient receives from an insurer.The A/R Allegiance system also uses “the power of 33,” meaning three attempts every 30 days to contact a patient using three different technologies, motivating people to pay their current and past-due accounts. The automated process employs mailed invoice statements as well as email, text messaging, automated phone calls and online elements, all managed by an online dashboard that integrates with a provider’s patient management system. There is also an online payment portal. A/R Allegiance integrates with suppliers such as Fastrack, Computers Unlimited, TeamDME, MedAct and others, and can be used with any system based on daily data extraction to provide up-to-date information.
“The difference between going out of business and staying in business is your ability to collect from the patient,” says Keith Lilek, CEO of A/R Allegiance Group. “It’s never been like that before. The patient-pay portion used to be a throw-away, but now it’s integral to profitability.”
Surfing for Software
A/R Allegiance Group
www.arallegiance.com
ATG Rehab
www.atgrehab.com
Brightree
www.brightree.com
Family Medical Supply
www.familymedsupply.com
MedAct
www.medactsoftware.com
