HME providers are watching their margins shrink in the industry's current climate. Under pressure from conditions beyond their control, providers are looking to adapt by using factors they can control, such as costs and business practices. One way to increase efficiency and boost the balance sheet is to update business software, and vendors say benefits to the bottom line can more than offset the investment.
"We are going to have to do a lot more with fewer people," says Kent Barnes, director of marketing for Brentwood, Tenn.-based TeamDME! "Integrated systems allow providers to increase customer satisfaction and to make better decisions looking at information at their fingertips."
Flexible Systems Needed
Business software for HME providers is not one-size-fits-all. Providers should carefully do their due diligence to evaluate various software products because all systems have strengths and weaknesses, says Robin Campbell, senior systems consultant for Billings, Mont.-based Computers Unlimited. "When I work with somebody, I ask what issues they are trying to resolve and what they are trying to accomplish. They need to do an internal analysis of what their goals are, whether it's to alleviate pain or to grow the company by 10 percent without adding staff."
When looking for a new system, Campbell suggests providers should consult with employees from various parts of their business and compile a list of, say, the top 15 things they need in an application. The product choices that meet those needs will be a manageable number, and providers should then ask each vendor for an in-depth demonstration.
Looking for business software should be a "very organized, well-structured process," Campbell says. "You want a system that's intuitive and easy-to-use, but it's truly about functionality … Providers should ask, 'Am I accomplishing the goals I set at the beginning?'"
Computers Unlimited's TIMS (Total Information Management System), for example, evolved from a distribution system, so its strong points are inventory management and integrated accounts payable/general ledger modules, Campbell says.
The pressure of competitive bidding and reimbursement on providers makes it critical that software systems collect correct information up front, she points out. "If you are getting less money, you have to be more efficient. Today, the information you have to collect is much more stringent. Denials in the range of 25 percent can result from not getting the right information up front, not knowing what carriers require and not being flexible enough to acquire it."
Time to Upgrade?
The demand for software in the HME world is strong, says Mike Clark, director of operations, Definitive Homecare Solutions, Westerville, Ohio, which offers the CPR+ for HME system. However, many providers have clung to older, outdated systems, and their hesitancy to convert prevents them from operating efficiently in a time when efficiency matters most, Clark says. When older systems start costing HME companies money or can no longer be supported, they have to make a change.
"Some providers may not know what's available," Clark says. "Many decide to get new systems in reaction to deficiencies in their current system rather than any knowledge of newer developments. When they see the new capabilities for the first time, it's a revelation. But it's a difficult step for a business to commit itself to updating technology. It's a big deal."
Clark says some HME providers are not aware of new capabilities because of a lag between emergence of new system features and their widespread adoption among providers.
One thing both Campbell and Clark note is that providers need to choose a system that fits both their functions and their size. CPR+ for HME is applicable to any size business, for instance, but the software is most useful for mid- to large-size providers, says Clark. The same is true for TIMS, Campbell says. "We have always been a true business application, not just a reimbursement/billing package. The bigger you are, the more you get out of the application."
Users of Plainview, N.Y.-based Fastrack Healthcare Systems' Fastrack HME, which automates the financial, clinical and operational aspects of an HME, include all-sized providers, according to Spencer Kay, president. The system is offered either as a Web-hosted system (typically for smaller companies) or as a system a company can buy (see "On a Server of in the Cloud" sidebar at the end of this story). The software is modular, and new features can be added as needed.
"I think [providers] need to look at what part of a system will help them reduce their staff or not have to add staff as their business grows," says Kay. "One of our clients in California has seen his business double and has only had to add one employee …
"We can't control reimbursement levels, but we can control business costs and improve productivity. We can improve profit margins and cash flow," Kay says. "There are a lot of laggers out there, and some of the technology has been around for seven to 10 years," he adds. Still, many HME companies do not have a warehouse system or a delivery system.
"Many [providers] are not operating any differently than they were five years ago, and that's not a plan to survive," Kay says. "The really good companies are incorporating technology, including document imaging and an automated warehouse system."
On the subject of document imaging, the business experts agree, if HME providers aren't using this technology, they should be. Working with digital images of documents rather than piles of paper charts can lead to greater productivity, not to mention eliminating the need for rows of file cabinets. But they note it is important to look for a system that is easy to use: The goal is to increase efficiency, not increase the time spent on the filing process.
As far as software implementation success, the keys are "effective application of the product you have and staff education," advises Team DME!'s Barnes. "You're never going to find a perfect software — there isn't one out there." For starters, electronic systems can lower DSO (days sales outstanding) and speed up reimbursements, he says. "There are lots of ways to save money if you implement a smart IT package."
Although providers must have some kind of billing system to keep the money coming in, many have not implemented inventory, asset tracking or asset utilization programs, continues Barnes. He notes that some smaller HME companies are lagging in the area of inventory control, mainly because their efforts are focused on collections.
Providers might also save on professional accounting fees by investing in a more feature-rich accounting program, he suggests. Team DME's product, which started as an accounting program, now incorporates multiple modules for inventory control, order entry and more, Barnes says, enabling access to information on a company's financial health without having to go to a separate accounting program.
Return on Investment
There are many ways to show a return on an investment in software. Reduced costs and better cash flow are benefits of automated business systems, says Definitive Homecare Solutions' Clark. He says he regularly sees customers who enjoy a 30 percent drop in DSO. In terms of efficiency, automated business systems can often replace an employee who previously spent all day placing orders to a manufacturer or creating and confirming delivery tickets.
"You can put those existing employees to work doing something else. It doesn't take a lot of man-hours to justify the purchase of software," Clark says.
Another area needing more efficiency is delivery, Campbell points out. "A bottleneck in the process is confirmation," she says. "A driver scribbles a number and then it can't be read. You can't bill until you get that information. Using barcoding is crucial, along with using hand-held devices in the field to enable drivers to record all the information electronically and to capture the customer's signature, then update the order electronically." Such systems offer a relatively fast ROI, Campbell says.
Implementing an inventory control package enables providers to increase inventory turns and move toward keeping less inventory on hand, which saves costs, notes Barnes.
"There is still a large group of DME providers in the country using paper processes," adds Ben Wheeler, director of HME business development for RemitDATA, Memphis, Tenn. "There is an opportunity for technology companies to provide low-cost technology to the smaller dealers. We are seeing more and more consolidation in all the markets; even doctor groups are combining to cut costs. Everybody is trying to do more with less."
RemitDATA offers a Web-based solution focusing on reimbursement management and document management, working alongside current practice management or billing systems to streamline the processes. "We position ourselves as somewhat software-agnostic," Wheeler says. "We supplement the data [providers] have in their practice management and billing system and provide independent analysis of their data … We allow them to compare themselves not just to the national data but to their peers in the local region."
Wheeler says a group of North Carolina providers are aggregating their data regionally and using the resulting database to support appeals to payers related to denial trends. "You have technology available to represent yourselves as a group and to seek action," he says.
Another key to determining ROI is to analyze the number of steps needed to complete certain tasks in the office, Wheeler says. "How many clicks and how many walking steps? It may seem difficult, but you should analyze how technology can eliminate steps in the process.
"If you have a bad process and you add technology, you will just have a more efficient bad process. After you outline your processes, you can look for software to help eliminate steps in the process, which can equate to real dollars."
What Providers Need to Know
Clark says that even though providers may have invested in the software, many frequently under-utilize their billing systems and its features. But coupling software improvements with training resources — like newsletters, Web-based training, user conferences and personalized onsite training — can help ensure that users take full advantage of the improvements.
HME providers tend to take a narrow view of the capabilities of business systems, Clark says, and often look for a system to handle electronic billing, for example. "The focus should instead be on how you can develop efficiencies in each part of your business, from deliveries to patient management to inventory. They should speak to several software providers before making a decision and walk with every supplier through every step of their business to see how the software product could meet the need and improve on it."
In some cases, existing products do not meet a customer's needs and vendors must provide some level of customization, Clark says. "A good software provider can help with data conversion and by providing a defined course of action to get from point A to point B."
Wheeler says that many HME providers mistakenly think that new business software will be difficult or painful to set up. "The technology companies out there have been around for years and have ironed out the setup processes," he says, so providers should not let their concerns delay technology implementation.
On a Server or in the Cloud?
Business software systems are increasingly being offered as a service on the Internet. Known as "Software as a Service" (SAAS), cloud computing or Web-hosted systems, they provide software functionality to a business typically for a monthly fee. Here are some advantages and disadvantages of Web-hosted systems versus server-based systems in which customers own the computers running the software and own a license to the software.
-
Web-Hosted Systems
Pros: A system that operates in the "cloud" requires no upfront investment in computer servers or software licenses; there is a lower cost of entry and only a monthly fee, which simplifies budgeting and makes costs more predictable. All information technology responsibilities shift to the software vendor, thus eliminating the need for technical staff and backup systems. Another advantage is easy access to systems for employees working offsite or from home. Using a subscription-based service model provides flexibility for the user and requires that the vendor "earn" the business when it's time to renew.
Cons: Data security is often cited as either an advantage or a disadvantage of Web-based systems. Data security, redundancy and the ability to preserve data may be benefits, but for some, these systems raise questions about control of critical business information and health care data. Even software systems protected by security may not enable a user to control their data fully in a manner specific to their business.
Retrieving information if a provider wants to change systems could be another complication. Another possible disadvantage is that monthly subscription fees could inch up as technology improves, so the long-term cost could be higher than expected.
-
Server-Based Systems
Pros: In addition to arguments about control of information assets, another advantage of the client/server configuration is that a hardware/software purchase is considered a capital expenditure for tax purposes. A software license is an asset that can raise the value of a business, and it is easier to integrate third-party applications if you own the license to the software. Also, some users prefer a Windows-based interface to a browser-based interface when accessing multiple records and flipping back and forth among them.
Cons: Costs are less predictable, including hardware, software and any ongoing service fees. Adding users or locations can also add costs.
The Next Big Thing
Here's some feedback from HME software vendors on technology developments providers should be looking out for:
-
Kent Barnes of TeamDME! sees a trend toward systems that provide patient demographic information and confirm eligibility and "same or similar" status in a front-end process that is seamless to the application, which can help prevent collection problems later on.
-
Mike Clark of Definitive Homecare Solutions foresees a system that will address the sales and marketing needs of HME businesses by deepening the level of communication with patients in order to, for example, let them know of availability of a company's ancillary products and services.
-
Ben Wheeler of RemitDATA sees a trend toward digitizing paper forms at the point of delivery. "Most providers take a stack of papers out into the field to be signed, and then a paper trail has to be managed back at the office," he says. "Point-of-sale delivery devices can eliminate the need for hard-copy documents in the field. It's a great way to eliminate a big source of paper."
-
Robin Campbell of Computers Unlimited predicts systems will soon be smarter and have built-in rules. "The billing rules are built into the application so the system guides them through the process, providing red flags where necessary. They won't need a big thick manual [of rules]. Tools will be proactive instead of reactive. It's going to come; we are in the process of developing it," she says.
-
Spencer Kay of Fastrack Healthcare Systems foresees developments to allow HME providers to take better advantage of the Internet. "An e-commerce Web site is an easy extension of a provider's business," he says. Providing access to systems for the sales force and referral sources through a Web portal can automate order entry, eliminate redundant work flow and avoid potential keying errors.
